norman t l chan : monetary policy ’ s effect on wealth distribution and a way forward for policymakers welcoming remarks by mr norman t l chan, chief executive of the hong kong monetary authority, at the hong kong monetary authority and federal reserve bank of new york joint conference, hong kong, 23 may 2019. * * * 1. good morning, president bullard, director hirtle, ladies and gentlemen. welcome to this conference jointly organized by the federal reserve bank of new york and the hong kong monetary authority. i would especially like to thank our overseas guests who have travelled a long way to be with us today. 2. over the past 40 years, the global economy has undergone impressive growth and transformation. from 1980 to 2018, ppp - adjusted real per capita gdp in advanced economies and emerging market economies have increased by 94 % and 205 % respectively1, driven by globalisation, open markets, technological advancements, and the general trend of falling inflation. 3. but the news is not all good. while the world economy has done well on the whole, economic inequality has widened noticeably at the same time. just take a look at the gini coefficient, which is a commonly cited measure of income inequality. in hong kong, the gini coefficient has risen steadily from 0. 476 in 1991 to 0. 539 in 2016, whereas in the us, it has increased from 0. 449 in 1991 to 0. 519 in 2015. 2 economic inequality causes social divisions, with the rise in populism especially in the us and europe being one of the unwelcome symptoms, and it also affects development and growth in the longer run. indeed, problems with income and wealth disparity have become so acute that it has recently triggered a debate on the “ crisis of capitalism ”. imf managing director christine lagarde, when presenting her global policy agenda at the imf spring meetings last month, also pointed out that the rewards of economic growth have not been shared, and called for a “ new multilateralism ” which will, among other things, foster inclusion. 4. with so much at stake, policymakers simply cannot brush aside the issue of the widening gap between the “ haves ” and the “ have - nots ”. over the past two years, i have been talking about, on different occasions, how globalisation, technological innovation and monetary policy may have affected distribution of income and wealth. today i wish to offer some further thoughts about

equivalent to her income for one year. clearly in this case the bank staff had little, if any, regard for the financial circumstances and the lack of investment experience of the customer ; nor did the bank staff adequately explain the risks and penalty of early termination. this is a blatant breach of the customer ’ s trust. the hkma cannot condone this kind of practice and will take necessary supervisory and disciplinary actions to protect the interests of bank customers. in this particular case, the bank agreed to cancel the policy and refunded the full amount of the first year premium to the customer and the bank staff concerned has been suspended by the hkma from selling investment products for a period of three years. what do we expect bank consumers to do to protect their own interests? justice upheld, sounds a happy ending. but there is always the other side of the equation. there is a commonly held view that the responsibility for consumer protection rests with banks, the regulators and the government. i don ’ t think this is a helpful view if we want to promote consumer protection. true that banks owe their customers the duty to look after their interests and to treat them fairly. true that the government should provide the legal framework and set the policies for protecting consumers. equally true that regulators will use their powers to enforce the consumer / investor protection requirements. but an important piece is missing from the jigsaw. bank customers also bear a major responsibility in bis central bankers ’ speeches protecting their own interests and rights. indeed i would argue that it is crucial for bank customers to become “ smart and responsible ” consumers of banking services. incidentally, at the international level, the g20 in its high - level principles on financial consumer protection is also emphasising the need for financial consumer literacy. let me use a couple of examples to illustrate this point. before a customer shops with a new credit card, he should take time and effort to understand the key terms of the credit card, such as the interest rates for cash advances and any applicable charges for late payments etc. he should learn how to take good care of his credit cards and atm cards to avoid theft or other kind of scams. when he logs onto internet banking, he should exercise care to avoid bogus bank websites and reduce the risks of being hacked. this is also very true when it comes to investment decisions. investing one ’ s savings with the hope of generating higher returns than bank deposits is a natural and legitimate aspiration of most bank customers, but they