MR CHAN KIN-POR (in Cantonese): President, the motion and the amendments proposed by Members today are addressing issues related to the functions and the staffing structure of the Hong Kong Monetary Authority (HKMA) respectively, and lots of comments and criticisms have been put forward. Also, Honourable colleagues who spoke have voiced many different points of view. Having worked in a bank for many years, I would like to take this opportunity to share my viewpoints with all of you.
Many Members pointed out that the work of the HKMA had been lacking transparency and accountability; some also alleged that there were many unreasonable aspects regarding the remunerations of the senior management as well as the staffing structure of the HKMA. Actually, public opinions have echoed similar views. For example, since many years ago, the public opinions have been directed at the excessively high remunerations of the HKMA’s senior management. However, recently, there have been increasing criticisms on the lack of transparency of the HKMA’s work. In my opinion, given such strong views from the outside, the Government certainly has the responsibility to look into the problems concerned in depth. If the problems are factual, it will have to make improvement recommendations; if the criticisms are untrue, it will then have to give the public a clear explanation.
However, even if the above accusation is factual, the work of the HKMA should not be discounted across the board, especially the efforts devoted by the HKMA in fighting against the financial tsunami and stabilizing the exchange rate of Hong Kong dollar. While many people criticize that there was inadequate monitoring on the part of the HKMA in the Lehman Brothers incident, not many note that the HKMA has, for many years, established a sound monitoring mechanism over the operation of banks to help Hong Kong fight against the financial tsunami successfully. In fact, there may be imperfections on the part of the HKMA in consumer protection which probably needs to be strengthened substantially, but it is inappropriate to align this problem with other work of the HKMA.
Ever since the outbreak of the financial tsunami, many banks in the United Kingdom, the United States, Europe and so on have been in trouble despite the perfectly well developed financial systems and the very strict monitoring work in these countries. In Hong Kong, on the contrary, though it is extremely susceptible to the international financial turmoil given that it is a highly open small economy and does not have its own independent monetary policy because of the linked exchange rate system, banks in Hong Kong are free from any problems. This does not mean that banks in Hong Kong did not have a hand in the toxic bonds of the United States, but means that the monitoring efforts devoted by the HKMA to the financial system are effective. These efforts include measures such as demanding banks to maintain sufficient liquidity and capital, and asking banks regularly to submit financial returns in order to deter non-compliance of banks. As we know, if some banks of Hong Kong teeter on the verge of bankruptcy under the weight of heavy bad debts, there will be unthinkable consequences. Fortunately, this situation does not exist in Hong Kong.
As regards the issues relating to the Lehman Brothers incident, the Legislative Council subcommittee to investigate the Lehman Brothers incident is sparing no effort to carry out the investigation. I believe that the subcommittee will certainly find out where the problem lies. When the time comes, a fair judgment will be formed as to what responsibilities the HKMA must bear. Besides, as the financial tsunami has not completely subsided, the possibility of a second wave cannot yet be ruled out. Hence, it is indeed too early to perform a surgery on the HKMA at this stage, which may in consequence weaken the ability of Hong Kong to counteract the tsunami.
Overall speaking, notwithstanding that the HKMA has made significant contribution to the stability of the banking system of Hong Kong, it cannot merely sit and watch without resolving its problems. The Government must study in detail the various problems with the HKMA in order to address the doubts of the public. However, this should only be done pending, at least, the completion of the report on the investigation of the Lehman Brothers incident and the subsidence of the financial tsunami. Any drastic measures taken at this stage probably lack careful consideration and are unfair in every respect.
President, I so submit.