As emphasized by the Director of the State Statistical Office, Mr. Apostol Simovski, the Republic of Macedonia has long been integrated into the system of the so-called IMF’s Data Standards Initiatives. This system is extremely dynamic and started to develop since the mid-1990s, in response to the then international financial crisis, in order to promote transparency of both economic and financial data. I say dynamic, given that its construction blocks have been continuously changing and increasing. Its last, third construction block is the SDDS plus which reflects the weaknesses identified in the statistical data infrastructure that surfaced with the latest global economic and financial crisis from 2008. It is a fact that the genesis of the crisis was not located in the lack of data, but fact is also the identified need for an enriched data set for conducting more effective economic policies. This crisis has clearly shown how inadequate regulation and excessive risk-taking can lead to a collapse of the financial system. It has shown how the underestimation of the strength of the links of the financial system with the real sector, as well as the underestimation of cross-border exposures of economies and financial integration, could lead to inadequate assessment of macro-financial links and underestimation of risks. The SDDS plus is actually a response of the international financial community to these statistical gaps. This initiative means enrichment of statistics, in both scope and quality, in order to timely recognize and appropriately react to vulnerabilities that may arise in an economy.
I conclude that an exchange cross rate between Hong Kong and the Mainland which varies, or has the potential to vary, is not a problem for us, and this seems set to remain the case for the foreseeable future. The corollary to this is that there would be no advantage in attempting to hitch the HK dollar to the renminbi in some formal or permanent fashion. Other options? There are of course other alternatives which might be explored. For example, in a perfect world, if we were to set ourselves the narrow objective of sustaining our price competitiveness index at a particular level and we possessed a nicely calibrated model of the economy, and if we then applied suitable methodology, we could derive some formula for the optimal exchange rate, which would doubtless be different from that determined by the present regime, and we could then devise an operational strategy to deliver that exchange rate path. But this sort of desktop solution could be a nightmare in reality. Even if the empirical basis of the formula was entirely reliable (a wholly unrealistic assumption), imagine the possible consequences for interest rates or foreign reserves, and the practical problems in terms of operability, comprehensibility, transparency, credibility, financial market confidence, and so on. Such problems could be particularly acute, and the risks of such a strategy therefore correspondingly high, in such an open economy and open financial market-place as Hong Kong. I have deliberately exaggerated in order to make the point.