WEDNESDAY, APRIL 27, 1994
OF
IT IS REMARKABLY DIFFICULT TO JUDGE THE RIGHTS AND WRONGS THIS DISPUTE, AND TO PICK ONE'S WAY THROUGH THE STATISTICAL MINEFIELDS LAID BY BOTH SIDES. I DO NOT INTEND TODAY TO GET EMBROILED TOO MUCH IN THE TECHNICALITIES OF THIS DEBATE SINCE WE ARE STILL DOING OUR OWN RESEARCH ON THE MATTER. WHAT I CAN DO HOWEVER IS TO INDICATE THE MAIN AREAS THAT ARE BEING ADDRESSED BY THE HONG KONG MONETARY AUTHORITY (MA) WHOSE CONCLUSIONS WILL FORM THE BASIS FOR THE GOVERNMENT'S RESPONSE TO THE CONSUMER COUNCIL'S REPORT. THREE FUNDAMENTAL ISSUES ARE BEING ADDRESSED BY THE MA:
(I)
(II)
HAVE THE INTEREST RATE RULES BEEN ABUSED FOR PROFITEERING BY THE BANKS? AND WHAT WOULD BE THE LIKELY IMPACT OF DE- REGULATION ON SMALL DEPOSITORS?
HOW VITAL ARE THE INTEREST RATE RULES TO MAINTAINING THE STABILITY OF THE BANKING INDUSTRY?
(III) HOW VITAL ARE THE RULES TO MAINTAINING THE STABILITY OF
THE EXCHANGE RATE OF THE HONG KONG DOLLAR?
THE MA IS UNDERTAKING THIS TASK BY CONDUCTING ITS OWN STATISTICAL ANALYSIS AS WELL AS BY TALKING TO INDIVIDUAL BANKS TO ENSURE THAT A FULL SPECTRUM OF OPINION IS HEARD. THIS PROCESS INEVITABLY TAKES TIME. SOME COMMENTATORS HAVE FOUND IT VERY EASY ΤΟ MAKE UP THEIR MINDS ON THIS ISSUE IN SOME CASES APPARENTLY EVEN BEFORE THE REPORT WAS PUBLISHED! BUT I HOPE THAT YOU WILL APPRECIATE THAT THE REPORT, OVER WHICH THE CONSUMER COUNCIL TEAM LABOURED FOR NEARLY A YEAR, DESERVES AN OPEN-MINDED AND ABOVE ALL CONSIDERED RESPONSE. WE ARE AFTER ALL DEALING WITH STRUCTURES THAT HAVE BEEN PLACE FOR 30 YEARS, THE ALTERATION OF WHICH SHOULD NOT BE CONSIDERED LIGHTLY.
IN
IN HIS ADDRESS TO THIS COUNCIL LAST OCTOBER, THE GOVERNOR COMMITTED THE ADMINISTRATION TO RESPOND TO THE CONSUMER COUNCIL'S INDUSTRY STUDY REPORTS WITHIN SIX MONTHS OF THEIR APPEARANCE. WE HAVE NO WISH TO DELAY OUR RESPONSE TO THE END OF THAT PERIOD, THAT IS END AUGUST THIS YEAR, BUT IT IS OUR INTENTION TO HEAR BOTH SIDES OF THE STORY, TO LET THE DEBATE RUN ITS COURSE AND TO REVIEW THE ISSUES THOROUGHLY IN THE LIGHT OF OUR OWN RESEARCH BEFORE COMING ΤΟ ANY CONCLUSION AND PUBLISHING A FULL RESPONSE. WE SHALL ALSO BEAR IN MIND THE VIEWS EXPRESSED BY MEMBERS IN THIS DEBATE.
ON ONE ASPECT, HOWEVER, THE MA HAS ALREADY INDICATED ITS VIEWS IN A RECENT LETTER BY THE CHIEF EXECUTIVE OF THE MA TO THE HON FRED LI WAH MING. THIS LETTER HAS BEEN REFERRED TO BY A NUMBER OF MEMBERS, INCLUDING THE PROPOSAL OF THIS MOTION. SO LET ME CLARIFY ITS CONTENTS. THE LETTER ADDRESSES THE QUESTION OF WHETHER THERE WILL BE ANY SIGNIFICANT IMPACT ON THE LINKED EXCHANGE RATE SYSTEM SHOULD THE INTEREST RATE RULES BE ABOLISHED.
THE LETTER NOTES THAT THE OBJECTIVE OF OUR MACRO MONETARY POLICY IS EXCHANGE RATE STABILITY; AND THAT THE MECHANISM FOR ACHIEVING THIS CENTRES AROUND THE LINKED EXCHANGE RATE SYSTEM ESTABLISHED IN OCTOBER 1983.
/SINCE THAT
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