ENG-1998 — Page 119

FINANCIAL AND MONETARY AFFAIRS

participate in the system. As at end of 1998, there were 730 issues with a total value of $224 billion lodged with the CMU. In addition to Hong Kong Dollar denominated debt instruments, the system also accepts foreign currency denominated debt instruments. The Securities Lending and Borrowing Programme for CMU private sector debt securities has enhanced the liquidity of private sector debt securities in the secondary market through the market making process and improved settlement efficiency by reducing settlement failures.

The CMU system was fully integrated with the new interbank payment system when the latter went live on RTGS in December 1996. DvP, both real time and end- of-day, became available. This matches international best practice in providing efficient, robust and risk-free clearing and settlement facilities for debt securities.

The CMU was linked to Euroclear and Cedel, the two largest international clearing systems in the world, in December 1994. These links, the first of their kind in East Asia, allow overseas investors and traders easy access to the Hong Kong dollar debt market. The HKMA continued to expand the network of bilateral linkages between the CMU and other central securities depositories (CSDs) in the region to facilitate cross border trading and holding of debt securities and to reduce the settlement risk. Following the linkages with Australia in December 1997, the CMU established a linkage with the CSD in New Zealand in April 1998. Separately, in January 1998, the HKMA arranged a $20 billion Note Issuance Programme for the Hong Kong Mortgage Corporation Limited (HKMC). Notes issued under this Programme have a high degree of secondary market liquidity as they are covered under the market- making arrangements for the Exchange Fund Bills and Notes.

Human Resources Development in the Financial Services Sector

A robust physical infrastructure cannot function effectively without the input of the right calibre. Human resources have long been one of the most important assets of Hong Kong. While financial products are becoming more sophisticated and financial transactions are moving towards full automation and straight through processing, Hong Kong needs to have a workforce that is adaptable and well-equipped to meet the challenges ahead and to reap the benefits offered by the new opportunities. In December 1997, the government set up a steering committee with participation of sector representatives and heads of major educational and training bodies to advise it on how best to meet the human resources needs of the financial services sector in the light of the future developments of the sector. The steering committee has engaged consultants to examine the human resources development opportunities in the financial services sector and the need for establishing a Financial Services Institute to ensure the supply of well-trained workforce of the right calibre. The Steering Committee will submit its recommendations to the Chief Executive in mid 1999.

Year 2000 Readiness of the Financial Services Sector

With the year 2000 approaching, there have been increasing concerns about the readiness of the key economic sectors. Given the importance of the Year 2000 issue and the significant impact it may have on the financial services sector and the economy as a whole, the government has set up a steering committee in March 1998 to co-ordinate the efforts of government, regulators and the industry in ensuring as far as possible that the financial services sector as a whole would sail through the millennium. Three subcommittees have been set up under the steering committee to

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