7
WEDNESDAY, APRIL 27, 1994
BEEN
SINCE THAT TIME A SERIES OF MONETARY REFORM MEASURES HAS INTRODUCED TO STRENGTHEN THE SYSTEM AND OUR ABILITY TO ENSURE EXCHANGE
THAT THESE STABILITY.
MEASURES HAVE BERN SUCCESSFUL IS
RATE
UNSHAKEN INCLUDING THE
BY THE FACT THAT THE EXCHANGE RATE HAS REMAINED ILLUSTRATED DESPITE AN ABUNDANCE OF EVENTS IN THE PAST FEW YEARS, STOCK MARKET CRASH IN 1987, THE EVENTS IN CHINA IN JUNE 1989, THE GULF WAR IN 1990, THE BCCI AFFAIR IN 1991 AND SO ON.
OF
то
HAS RATES, TO THE
OF
WITHIN ITS MONETARY ARMOURY, THE MA NEEDS TO HAVE THE MEANS RELATIVE INFLUENCING THE INTEREST RATES OF THE HONG KONG DOLLAR,
MAINTENANCE THOSE OF THE U.S. DOLLAR, IN A WAY THAT IS HELPFUL TO THE OF EXCHANGE RATE STABILITY. IT IS TRUE, AS THE CONSUMER COUNCIL
THAT ARGUED,
THE ABILITY TO INFLUENCE
INTERBANK WHOLESALE RATHER THAN RETAIL DEPOSIT RATES, IS MORE DIRECTLY RELEVANT PURPOSE OF EXCHANGE RATE STABILITY. HOWEVER, THE DIFFERENT TYPES INTEREST RATES ARE IN PRACTICE INTER-RELATED. IN MONETARY OPERATIONS,
BE THEREFORE,
FOR THE MONETARY AUTHORITY IT IS PRUDENT
IF NOT POSITION
EFFECTIVE INFLUENCE OVER A WIDE, то EXERCISE WHOLE, SPECTRUM OF INTEREST RATES INCLUDING THOSE ON RETAIL IN SHORT, AN EXTENSIVE RANGE OF MONETARY WEAPONS IS ALWAYS TO A RESTRICTIVE.ONE.
THE INTEREST
TO
IN A THE
DEPOSITS. PREFERABLE
ARMOURY RATE RULES ARE PART OF THE MONETARY PROVIDE AN EFFECTIVE MECHANISM
FOR
SETTING
AT
INTEREST SUCH RATES AFFECT ΤΟ FOR THE UNDOUBTEDLY
THE MA
THEY PRESENT. RATES FOR THE RETAIL DEPOSITS THEY ARE DESIGNED TO COVER. MAY IN TURN INFLUENCE WHOLESALE INTEREST RATES OR MAY DIRECTLY
THIS LED THE DESIRE TO HOLD HONG KONG DOLLAR BALANCES, CONCLUDE THAT WHILE THE INTEREST RATE RULES ARE NOT CRUCIAL PURPOSE OF MAINTAINING EXCHANGE RATE STABILITY, THEY ARE RELEVANT AND HELPFUL FOR THAT PURPOSE.
THUS, THE MA HAS EXPRESSED A
PREFERENCE FOR
THAT HELPFUL THE INTEREST OF
ELEMENT IN IT'S MONETARY ARMOURY TO BE RETAINED IN MAINTAINING EXCHANGE RATE STABILITY.
-
CONSERVATIVE,
AND
TO CONCLUDE INTEREST RATE
I IT WOULD
SHOULD
SOME HAVE SAID THAT THE MA IS BEING OVERLY PERHAPS EVEN UNDULY MODEST IN ITS ABILITY TO DEFEND THE EXCHANGE RATE. BUT EVEN IF THE GOVERNMENT WERE, IN THE FINAL ANALYSIS, THAT THE MA COULD STILL DO A RELIABLE JOB WITHOUT THE RULES
A CONCLUSION WHICH AS PART OF ITS MONETARY ARMOURY STRESS THAT IT HAS NOT YET REACHED AND MIGHT NOT REACH STILL BE NECESSARY TO FORM A VIEW ON THE OTHER STABILITY ISSUE WHICH I
OF THE NAMELY, WHETHER THE SOUNDNESS MENTIONED EARLIER
WERE SYSTEM COULD BE UNDERMINED IF THE INTEREST RATE RULES ABOLISHED.
TO WHICH THE MA,
IN IT'S
ROLE AS
BANKING ΤΟ BR
BANKING
THIS IS SOMETHING SUPERVISOR, IS PAYING SERIOUS ATTENTION. AGAIN, I MUST STRESS THAT IT HAS NOT YET MADE UP ITS MIND, BUT CERTAIN OBSERVATIONS CAN BE MADE THIS STAGE.
AT
/THE EFFECT