O
WEDNESDAY, APRIL 27, 1994
LET ME BE CLEAR THAT IN UTTERING THIS WARNING NOTE, I AM NOT SEEKING TO PROTECT THE POSITION OF THE LARGER BANKS. THEY ARE QUITE CAPABLE OF LOOKING AFTER THEMSELVES AND IN A DEREGULATED INTEREST RATE ENVIRONMENT THEY WOULD NO DOUBT HAVE THE FINANCIAL MUSCLE TO ENSURE THAT THEIR PROFITABILITY WAS UNIMPAIRED. RATHER, MY CONCERN IS WITH THE SMALLER BANKS WHICH ARE LESS WELL EQUIPPED BY VIRTUE OF THEIR SIZE TO COMPETE SUCCESSFULLY IN AN INTEREST RATE WAR. THESE BANKS ADD ΤΟ THE DIVERSITY OF THE BANKING SCENE IN HONG KONG AND OFFER A VALUABLE SERVICE TO THEIR CUSTOMERS. WE MUST BE SURE THAT ANY CHANGES IN THE INTEREST RATE RULES WOULD NOT UNDERMINE THEIR POSITION.
FINALLY, LET ME REPEAT THAT WE ARE APPROACHING THIS ISSUE WITH AN OPEN MIND AND THAT NO DECISIONS HAVE BEEN MADE. THE MA HAS NOT YET COMPLETED ITS WORK. IF I HAVE TENDED TO DWELL ON THE NEED TO MAINTAIN STABILITY OF THE FINANCIAL SYSTEM IN THE FACE OF DEREGULATION, THIS IS BECAUSE THE CASE FOR DEREGULATION AND INCREASED COMPETITION HAS BEEN PUT SO ELOQUENTLY BY PROFESSOR THE HON EDWARD CHEN AND THE VICE- CHAIRMAN OF THE CONSUMER COUNCIL.. HOWEVER, IT IS PART OF THE JOB OF GOVERNMENT TO CONSIDER THE COSTS AS WELL AS THE BENEFITS OF CHANGE. IN THIS CASE, THERE MAY BE A TRADE OFF BETWEEN RISK AND RETURN FOR THE DEPOSITOR. IT IS CERTAINLY NOT THE CASE THAT ABOLITION OF THE INTEREST RATE RULES WILL INEVITABLY LEAD TO INSTABILITY. EQUALLY, WE SHOULD NOT BLIND OURSELVES TO THE FACT THAT SUCH A RISK EXISTS. THE QUESTION WHICH WE NEED TO ADDRESS, AND WHICH I HOPE THAT HON MEMBERS WILL TAKE SERIOUSLY, IS WHETHER THIS IS A RISK WORTH TAKING.
SEVERAL MEMBERS HAVE REFERRED ΤΟ THE SUBJECT OF BANKING DISCLOSURE DURING THE COURSE OF THIS DEBATE, AND THIS INDEED WAS ALSO ADDRESSED BY THE CONSUMER COUNCIL REPORT, ALTHOUGH IT WAS NOT DIRECTLY THE SUBJECT ΤΟ THIS DEBATE. BUT LET ME TAKE THIS OPPORTUNITY, MR PRESIDENT, TO ASSURE MEMBERS THAT THE ADMINISTRATION ALREADY ACCEPTS IN PRINCIPLE THAT BANKING DISCLOSURE SHOULD BE IMPROVED. THE MONETARY AUTHORITY HAD ALREADY ESTABLISHED THE WORKING PARTY WITH BANKING REPRESENTATIVES AT THE BEGINNING OF THIS YEAR, PRIOR TO THE APPEARANCE OF THE CONSUMER COUNCIL REPORT, TO EXAMINE THE WHOLE QUESTION AND IDENTIFY THE STEPS THAT COULD BE TAKEN TO IMPROVE DISCLOSURE, AND
THE TIME FRAME FOR THEIR IMPLEMENTATION, WE HOPE TO SEE RESULTS BY THE MIDDLE OF THE YEAR.
MR PRESIDENT, IN THE LIGHT OF WHAT I HAVE SAID, IT WILL BE CLEAR THAT THE ADMINISTRATION IS NOT YET IN A POSITION ΤΟ DETERMINE WHETHER ANY CHANGES SHOULD BE MADE TO THE INTEREST RATE RULES. FOR THAT REASON, WE ARE NOT IN A POSITION TO SUPPORT THIS MOTION TODAY. AND THE OFFICIAL MEMBERS WOULD ABSTAIN.
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