Joseph Yam: Competition and cooperation among global and regional
financial centres
Congratulatory remarks by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary
Authority, at the ACI Asia - The Financial Markets Association, Hong Kong, 11 July 2008.
* * *
Mr Wiebogen, Mr Tan, Ladies and Gentlemen,
It is with great pleasure that I join you this evening to mark the inauguration of ACI Asia -
The Financial Markets Association. On behalf of the Hong Kong Monetary Authority and the
Hong Kong Special Administrative Region Government, I would like first to offer my
congratulations to all those who have worked hard over the last couple of months on the
establishment of ACI Asia. Special congratulations are also appropriate to Mr Wiebogen and
Mr Tan for the foresight and leadership they have demonstrated in this initiative.
Financial markets in the developed economies have been experiencing considerable stress.
At the risk of oversimplifying it, the current financial turmoil can be attributed to financial
innovation creating distortions in the financial system, including the compensation schemes
for the innovative lot, to such an extent as to lead to a serious erosion of credit standards. It
is at a time like this that everybody should be reminded of the importance of professionalism
in finance, at all stages of financial intermediation. With its long history and impressive
membership, ACI has developed very much into an icon of professionalism in finance,
contributing to "market development through education, market practices, technical advice
and networking events for the financial practitioners of the world". The Association therefore
has a very important role to play and faces in the coming years much greater challenge than
before in promoting and upholding professional and ethical standards in finance.
One interesting, perhaps even perplexing, aspect of the current financial turmoil is that
emerging markets, particularly those in Asia, have only been lightly affected, so far. One
reason is that financial innovation, in the form of credit risk transfer through securitisation by
the "originate and distribute" model, has not caught on in Asia to the same extent as in the
United States. Indeed, economies in different stages of financial sector development face
different issues, notwithstanding the clear trend of globalisation in finance. Correspondingly,
in promoting and upholding professionalism in finance, there may be a need for different
emphases and approaches, having regard to the different development stages that individual
regions and economies are undergoing. But it is also important that these different emphases
and approaches should be developed within the framework of global standards. I therefore
wholeheartedly support regional outreach initiatives of international standard setting bodies
such as the ACI.
Asia, of course, is region of rising importance in the global context, particularly in terms of
finance. Whether it is the volume of foreign exchange reserves or the growth of foreign
exchange turnover or the amount of savings that needs to be mobilised for promoting
economic growth and development, Asia is likely to occupy top position in the world, if it is
not already there. The prospects of a strong relative shift of financial market liquidity into Asia
are clear, so is the need for upgrading professionalism in finance, hopefully at a pace that is
commensurate with its increasing importance in global finance. It is therefore absolutely right
for the first regional office of ACI to be established in Asia and, if I may add, for it to be
established in Hong Kong, as the truly international financial centre in the region. On the
choice of Hong Kong, we are of course grateful and feel honoured, and I as Chief Executive
of the Hong Kong Monetary Authority and as Honorary President of the Treasury Markets
Association offer the full support of the two organisations to the activities of ACI and ACI
Asia.
Thank you.