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"The MPF will inevitably spurs the development of a full variety of hedging instruments," he added.
On regulation and supervision of MPF investment managers, trustees and other service providers, Mr Tsang said the Government would seek to strike the right balance between protecting the MPF assets and allowing the investment managers sufficient flexibility to maximize the yield.
Turning to the Mortgage Corporation, Mr Tsang said that it would promote stability in the banking and monetary sectors, as well as facilitating home ownership."
Mr Tsang said the Corporation would initially be 100 per cent owned by the Government with a capital base of $1 billion.
"The Corporation will be a wholesale financial intermediary, mainly purchasing residential mortgages from authorised institutions in accordance with a set of prudent criteria," Mr Tsang said.
In conclusion, Mr Tsang said that Hong Kong's debt market was geared up for further expansion in the coming years.
"Given our critical mass of financial institutions, excellent market infrastructure, advanced telecommunications, sound legal system and accounting and logistical support, Hong Kong can certainly play a leading role in financial intermediation in the region," he said.
"In particular, we are in an unrivalled position to carve a niche in arranging for China's debt issues," he added.
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