Moreover, will the enlarged EU capital market suck in capital from Asia to Europe? In the first four months of this year, for example, BIS Review 95/1998  -3-  Japanese net purchases of European securities totalled $ billion, while net sales of bonds and stocks in Asia totalled $ billion. Extended diversion of capital to Europe would undermine Asia’s growth prospects as well as Hong Kong’s position as an international financial centre. This could also happen if the European banks are tempted to consolidate their business in Asia to focus their efforts on their enlarged home market. This is not the occasion to be pessimistic. Overall, I believe that the euro will be a good thing for Europe and for the world economy. But as with any major change in the world financial architecture, Hong Kong will need to monitor developments closely and respond quickly to emerging threats as well as opportunities. Let me now turn to the HKMA’s regulatory response to the euro in Hong Kong. First, banks in Hong Kong need to be prepared to handle and account for the euro, particularly during the awkward transitional period before the legacy currencies disappear entirely. If they are not ready, many of the potential benefits of the euro for Hong Kong will simply not materialize.
Mr. Carse looks at the importance of the euro for Hong Kong Speech by the Deputy Chief Executive of the Hong Kong Monetary Authority, Mr. David Carse, at a Seminar on the euro, held in Hong Kong on 9/11/98. Introduction Ladies and gentlemen, I am very pleased to be here this morning to speak at this seminar on the euro organized by the Vocational Training Council in conjunction with the British Consulate-General and the Hong Kong Institute of Bankers. With the introduction of the euro less than two months away, this is obviously a good time to hold such a seminar. It is also fitting to hold it in Hong Kong where our fixed exchange rate system gives us a natural sympathy for its logical extension, the single currency. We are fortunate to have a number of experts on the euro here today to give us the benefit of their views, including my former colleague from the Bank of England, John Townend. My role in the seminar is to say a few words on the importance of the euro for Hong Kong. I will also take the opportunity to brief you on some of the regulatory steps which we have been taking to prepare for the euro. The introduction of the euro is a truly momentous change in the global economic and financial landscape. It is not simply a change of currency for the participating countries, though that in itself is a major event.