no matter how uncomfortable may be their short term consequences. ” sir philip added : “ but in my description of our economic policy stance, i do qualify the term ‘ non - interventionism ’ with the adjective ‘ positive ’. perhaps in the past i have not spelled out the implications of this adjective clearly enough. what it means is this : that the government, when faced with an interventionist proposal, does not simply respond that such a proposal must, by definition, be incorrect. quite the contrary. “ generally speaking, or so i would like to argue, the government weighs up carefully the arguments for and against an act of interventionism in any sector of our economy and on the demand or supply side in the light of present and likely future circumstances. the government then comes to a positive decision as to where the balance of advantage lies. it is true that, more often than not, we come to the conclusion that the balance of advantage lies in not intervening ; and, i must confess, i would be alarmed if we didn ’ t. yet, in all cases, the decision is made positively, and not by default, and it is not the non - outcome of a do - nothing approach. but, there are many examples of the government deciding, usually on the advice of its boards and committees, to intervene, in one way or another, in the free play of market forces. ” indeed there are many examples of intervention. we built the airport because, without government intervention, it would simply not have been economically viable. we built roads and bridges. we provided public housing, medical services, the list is long. but we tend to do less than other jurisdictions and so the size of our public sector in relation to gross domestic product is one of the smallest in the world. specifically in the monetary and financial systems, there is significant intervention in the form of the regulation of financial markets and the supervision of financial institutions. this is precisely because we feel that, in the words of sir philip, ‘ the balance of advantage ’ lies in so intervening and because ‘ imperfections in the operation of the market mechanism [ may lead ] to economic inefficiency ’. in very much the same spirit, we intervened in 1996 and built a real time payment system because the private sector was not able to come up with this highly desirable piece of financial infrastructure. we have been intervening since the beginning of 1990 to develop the hong kong dollar debt market, again because the market was considered essential for effective financial inter

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