But Hong Kong’s expertise in developing markets, in building the market infrastructure and, where necessary, in regulating markets and supervising market participants to uphold the efficiency and integrity of financial markets is there for everybody to see and tap. Furthermore, we know the region, and particularly in the case of the mainland of China, I would argue that we know a lot more than others, and so we are in an advantageous position to perform an advisory role. And the financial community of Hong Kong, including the regulators, have been actively playing that advisory role. I can speak from experience here, although it would not be appropriate for me to be too specific. In many of the Hong Kong Monetary Authority’s  BIS Review 112/1997  -2-  contacts with, for example, our counterparts in the mainland of China, the subjects for discussion are increasingly on financial affairs in the mainland rather than those in Hong Kong. 6. I believe that in performing this advisory role effectively we will open up opportunities for the financial services industry of Hong Kong. As markets are built and liberalized in these neighbouring economies, I am confident that our own financial institutions will gain access to the business in those markets through establishing a presence there, and eventually compete, I hope, on a level playing field with the domestic financial institutions.
While important progress is being made, this has recently been overshadowed by financial turmoil in the region, and the focus of attention has as a consequence been diverted to the provision of credit to assist Asian economies in need in making structural adjustments. We had the financial package for Thailand, and there have since been many ideas put forward for a general facility of some sort. These are being actively considered and we are taking an active part in the discussion, although there are currently still quite significant differences of opinion. The position that we are taking is that whilst regional solidarity is highly appropriate for a region with increasing economic, trade and financial integration and increasing interdependence, any regional financial arrangement must be structured with regard to international standards and practices. It would not be appropriate, for example, for a regional institution, if there is to be one, to prescribe medicine, along with financial assistance, that is different from those prescribed by the International Monetary Fund. It would immediately be seen as a soft window for financial support, thus creating moral hazard problems. I am hopeful that well-structured arrangements will emerge in due course. Certainly the climate is right and the momentum is there. 14. Perhaps I should take this opportunity to put the recent financial turmoil in Asia in a global perspective. First, the world is in very good economic shape. World economic output is estimated by the IMF to expand by 4-4½% in 1997 and 1998, the strongest pace in a decade.