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Mr Chen added that the successful and stable growth of the Chinese economy could only be helpful to the smooth transition of Hong Kong through 1997.

Today's HKMA Distinguished Lecture was the first of a series organised by HKMA to bring influential and distinguished persons from the international financial and academic community to Hong Kong to speak on issues of current and long-term interest.

The Distinguished Lecture series is intended to provide a forum for the Hong Kong financial community to hear and exchange views with leading world experts.

On the occasion of their visits, HKMA Chief Executive, Mr Joseph Yam, took the opportunity to exchange views with Mr McDonough and Mr Chen to improve understanding of central banking issues in general.

The areas covered included Hong Kong's monetary arrangements after 1997, Hong Kong's payment systems and central bank co-operation in the areas of market information exchange and linkages of payment and settlement systems.

In the discussions, Mr Yam thanked Mr McDonough and his colleagues for providing guidance and support over the years. Mr Yam said the New York Fed has been particularly helpful in the establishment of HKMA's first overseas representative office in New York and the provision of technical advice on the Real-Time Gross Settlement (RTGS) System. The RTGS System will be implemented later this month.

Mr McDonough noted the robust monetary framework and policies that Hong Kong has put in place to ensure monetary stability in 1997 and beyond. He also noted that the linked exchange rate has served Hong Kong well for over 13 years.

Mr McDonough added that the mutually independent relationship HKMA will have with the PBOC is commensurate with the independence that all monetary authorities need to safeguard stability of the currency under their guardianship.

"I am very happy to be here today in the company of the senior representatives of the HKMA and the PBoC," Mr McDonough said.

"The Federal Reserve has had a positive and constructive relationship with these fine institutions for many years. I was particularly pleased to support each for their autonomous participation in the Bank for International Settlements," he added.

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