TUESDAY, JUNE 18, 1985
IMPROVED LAW IN BANK SUPERVISION PLANNED
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NEW LEGISLATION WAS NEEDED IN HONG KONG'S SYSTEMS OF SUPERVISING BANKS, AS UNDERLINED BY RECENT EVENTS AND GOVERNMENT WAS SET ON IMPROVING THEM, THE SECRETARY FOR MONETARY AFFAIRS, MR DOUGLAS BLYE, SAID TODAY (TUESDAY).
SPEAKING AT AN INTERNATIONAL CREDIT AND FINANCE FORUM, MR BLYE SAID THAT GOVERNMENT INVOLVEMENT IN THE FINANCIAL SECTOR WAS INTENDED TO BE LIMITED TO THE MINIMUM TO ENSURE AN ADEQUATE BASIS FOR MACRO MONETARY POLICY, SOUND BUSINESS PRACTICE AND TO THE PROVISION OF A MEASURE OF PROTECTION FOR DEPOSITORS AND INVESTORS.
HE POINTED OUT THAT HONG KONG'S FINANCIAL SECTOR HAD EVOLVED IN MUCH THE SAME WAY AS OTHER SECTORS OF ITS ECONOMY, NAMELY THROUGH MARKET FORCES WITH A MINIMUM OF DELIBERATE DISCRIMINATORY INFLUENCE FROM GOVERNMENT.
+WE DO NOT HAVE POLICIES WHICH ARE DIRECTED SPECIFICALLY AT NURTURING THE FINANCIAL SECTOR, MR BLYE STRESSED, BUT AT THE SAME TIME NOTHING IS DELIBERATELY DONE TO RESTRICT IT EITHER.+
MR BLYE SAID THAT NOBODY SHOULD EXPECT THE GOVERNMENT TO ACT AS THE PRIME MOVER IN ANY FINANCIAL INNOVATION.
+ONLY GENUINE BORROWERS AND LENDERS ARE IN A POSITION TO TEST THE NEED FOR AND VIABILITY OF SUCH MARKETS AND THEY MUST PAY THE PRICE OF FAILURES, NOT THE TAXPAYER. THEY SHOULD ALSO REAP THE PROFITS.+
HOWEVER, WHEN BUREAUCRATIC OBSTACLES ARE IDENTIFIED AS UNREASONABLY IMPEDING LAWFUL AND ACCEPTABLE VENTURES, THE GOVERNMENT WILL ACT SWIFTLY TO RECTIFY THE SITUATION, MR BLYE SAID.
HE TOLD PARTICIPANTS AT THE FORUM THAT HONG KONG'S FINANCIAL SECTOR STOOD OUT AMONG THE OTHER MAJOR SECTORS OF THE ECONOMY WHICH HAD GROWN SUBSTANTIALLY OVER THE YEARS.
+ THE FINANCIAL SECTOR CONTRIBUTED ABOUT 17 PER CENT OF THE GROSS DOMESTIC PRODUCT TEN YEARS AGO, HE SAID. +NOW THAT CONTRIBUTION IS ROUGHLY 20 PER CENT.+
TWO FACTORS ARE LARGELY RESPONSIBLE FOR THIS EXPANSION IN THE RELATIVE IMPORTANCE OF THE FINANCIAL SECTOR, MR BLYE CONTINUED.
TREMENDOUS GROWTH IN THE ENTREPOT TRADE IS ONE AND THE OTHER IS DEVELOPMENT OF ITS ROLE FROM BEING AN ADJUNCT TO OTHER SECTORS OF THE ECONOMY, PROVIDING FINANCIAL SERVICES FOR DOMESTIC BUSINESS ACTIVITIES, TO BECOMING AN ATTRACTION TO INTERNATIONAL BUSINESS.
LOOKING INTO THE FUTURE, MR BLYE MADE AN ANALYSIS OF HONG KONG'S GROWING TRADE RELATIONSHIP WITH CHINA WHICH HE DESCRIBE AS THE WORLD'S MOST POPULOUS NATION WITH MARKETS STILL RELATIVELY UNEXPLORED.
HE SAID