Taking into account the Report, and how we see the banking sector developing, we see scope for developing HKAB’s role in four broad areas. First, and perhaps most important, the Report recommends that HKAB could take further its function as the voice of the industry. We support this recommendation. HKAB already fulfils this role to a great extent, particularly in its submissions on policy proposals and in its regular meetings with us on a variety of operational issues. But this role could be deepened, particularly in developing a more unified position on major policy issues, and in achieving a position that broadly reflects the views of the whole of the banking industry. I would even suggest that there is scope for HKAB to become not just the spokesperson for the banking industry, but also a lobbyist for the industry. This is not an easy task, because the banking industry in Hong Kong is diverse and not always able to come to a single view on issues that affect it. Nor is there any reason why it should do so on every issue. However, HKAB could develop its profile and gain strength as a representative organisation if it were to work on developing its role as the clear industry voice. The second main recommendation in the Report concerns HKAB’s role in the development of the Code of Banking Practice. The Code, which sets the standards for banking services, is jointly issued by HKAB and the DTC Association, with the endorsement of, and involvement of, the HKMA.
Competition also facilitates the work on holding back inflation. The EMU has particular importance for the scope of the trade. Many economists have tried to estimate this gain by looking at the way fixed and floating exchanges respectively affect trade, and they have found very little difference. However, a single currency is not the same as a fixed exchange rate. There are considerable practical and psychological differences. Professor Andrew K. Rose at Berkeley in the USA, together with some other economists, has instead compared trade within monetary unions with trade between countries outside of the monetary union, and made adjustments for facts such as monetary unions often sharing the same language, culture and other regulatory frameworks. When Professor Rose presented such a study for Sweden some time ago, he claimed that EMU could increase trade and integration by as much as 30-50 per cent over the course of a few decades. This could lead to an increase in Swedish welfare of over ten per cent in the long term. Rose himself admits that the figures are uncertain and other economists believe in much lower figures for trade gains. So what about the disadvantages? Giving up one’s own currency entails also giving up some of the right to self-determination in economic policy. The instrumental rate would no longer be set in Stockholm, but in Frankfurt and would reflect the economic situation in a large monetary area.