is visible on that front - better not simply for europe but for the world, which needs a strong european economy. and within europe itself i feel that there is something of a political imperative for the impact of the euro to have been demonstrated as unequivocally beneficial by the time that the potentially rather emotional withdrawal of national banknotes takes place in 2002. the concerns over the apparent tensions in economic policy in consequence of the euro ’ s arrival have plainly had some adverse effect on sentiment towards the euro in foreign exchange markets, although we know that other factors, notably the conflict in the balkans, have been important too. when you look at the ups and downs of the relationships between the world ’ s leading currencies over the years you will recognise that the depreciation in the euro since its inception is not all that exceptional, however much we may regret that movements of this sort may nowadays be regarded as within the definition of normal. but the attitude of international businesses and investors outside euroland to the euro will be coloured, to a degree, by perceptions of its likely volatility, and in that sense the start has not been as auspicious as one might have wished. prospects and opportunities but i suspect that those of us living a long way from euroland tend to underestimate the impact which the euro is having in terms of cost savings and risk reduction in cross - border trade, although we may see and feel something of the side effects in terms of heightened competition and usage of the euro in world business. at the same time, as i tried to elaborate earlier, the euro has the potential to become a force in global financial markets. as that happens, we in hong kong hope to play our part. indeed, we believe we are excellently placed to be involved in the expansion of usage of the euro in international financial markets. as a central banker i must repeat that i hope and expect that the ecb will be a staunch guardian of monetary discipline. this certainly does not mean that we can make accurate predictions about the exchange rate or interest rates, but it is likely to mean that the euro should in due course consolidate itself as a leading world currency in trade and finance, not least in this part of the world. meanwhile, the unified currency provides euroland with the opportunity to strengthen its collective economy, albeit an opportunity which has to be worked upon. and a strong and stable european economy is probably of greater importance to the world at large than is any particular level for the

david carse : environmental issues and their implications for financial institutions in hong kong keynote speech by mr david carse, deputy chief executive of the hong kong monetary authority, at the conference on environmental risk management for hong kong financial institutions, held in hong kong on 29 november 2000. * * * ladies and gentlemen, i am pleased to be here to deliver the keynote speech for this conference on environmental risk management for hong kong financial institutions. i congratulate the various organisers for putting together the conference, which i understand is the first of its kind to be held in hong kong. if so, it is long overdue. environmental issues have come very much to the forefront of public awareness in hong kong in recent years, and cleaning up the environment has become one of the government ’ s main preoccupations. there are all sorts of good reasons for wishing to do this, in terms of improving the quality of life and the long - term health and well - being of the people of hong kong. but there is also a growing recognition on the part of business, both here and elsewhere, that economic growth is inextricably linked with a healthy environment. at this year ’ s world economic forum in davos, business leaders voted global climate change the most pressing issue facing the world ’ s business community. it is all the more disappointing therefore that last week ’ s un summit conference in the hague on climate change should have ended in failure. at first sight it might appear that banks and other financial institutions, as service companies, have less responsibility for environmental protection than other companies, notably those whose industrial processes have a direct impact on the environment. however, this would be to ignore the central role in the economy that banks have as financial intermediaries. while they may not be polluters themselves, they will probably have a banking relationship with some companies that are polluters or could be in the future. this creates a number of risks for the banks, and raises the question of how these risks should be identified, measured, monitored and controlled. this is primarily a matter for banks ’ management to deal with, and i hope that today ’ s conference will help them to do so. but it is also an issue for banking regulators, particularly with the increased focus on risk - based supervision. in the case of the hkma, this is a process whereby we try to assess the extent to which banks are exposed to various types of risk and the quality of the systems used for managing these