17
MR. LI :
}
Sir, time and again, the Financial Secretary has
assured us that the arbitrage mechanisms within the
exchange rate system is working perfectly well. Now that
he has introduced, or forced the Hong Kong Association of
Banks to introduce the negative interest rate, does it not
mean that the Financial Secretary has now shifted the
burden of defending the peg entirely on the banking system
and should he not examine the arbitrage system in the link
rate system?
FINANCIAL SECRETARY : Sir, I think we have said at all
times that to maintain the link rate, the adjustment would
have to take place through the
the economy, in other words
through interest rates and indeed on the rate of
referred to the arbitrage
inflation. Mr. David LI has
mechanisms. We believe those mechanisms do work but of
course they may
knows.
not work in perfect form as Mr. LI well