be at variance with reality, but it is often perceptions that drive financial markets. economic fundamentals can probably explain some of the euro ’ s weakness over the past 14 months, but not all of it. i have tried to be frank in my assessment of the way in which the euro is viewed from asia. i hope i have not been so frank as to be discourteous. sentiment does appear currently to be somewhat frail and the outlook uncertain. i derive no satisfaction at all from that - we are all in more or less the same boat when it comes to the vagaries of the markets. and as the manager of hong kong ’ s substantial foreign reserves, i am also held accountable for the investment decisions taken. but i am confident that sentiment will improve and our investment in the euro will come good.

the euro and experience the benefits, as by central bank, government or european commission officials, or by politicians and their aides. the hkma view but let me say here that, insofar as the perception of the euro within the hong kong monetary authority ( hkma ) is concerned, it is clearly a supportive one. as i implied earlier, we have a keen interest in the euro and a quiet wish for its success. this should demonstrate to the world that a fixed exchange rate ( in your case more than a fixed rate - a unified currency ) vis - a - vis some or all of one ’ s trading partners is a viable option. there have been few other “ fixers ” since the bretton woods system broke down in the early 1970s. but hong kong since 1983 and other more recent currency board countries, such as argentina, bulgaria and estonia, have shown that fixing is a viable strategy. it may indeed even be superior, given the discipline it imposes and the salutary attention it focuses at the national level on structural efficiency and flexibility. of course it may not suit all, and the imf, for instance, continues mostly to espouse free floating in its prescriptions for individual countries. but the imf does acknowledge that options at the other extreme of the spectrum from free floating may be appropriate in some circumstances, and in its pronouncements the imf has given unflinching support to hong kong ’ s peg - as indeed it has to the euro. the success of the euro has further implications for the asian region. one lesson learned from the experience of the asian financial turmoil is that if we wish to reduce the vulnerability of the small and open emerging markets in asia to international finance we need, among other things, to build bigger markets. one way of achieving this, if not the only way, is to follow the example of euroland and go for some form of currency union. although the euroland type of pre - conditions for currency union are far from being satisfied in asia at present, with so much diversity and fragmentation in the geography, culture, stages of development and policies, this is an option that asia can ill afford to ignore in the long run. the experience of euroland operating with the euro is therefore something that should be watched in asia, and is being watched in the hkma, with keen, supportive interest. meanwhile, one way of reducing the short - term vulnerability of small and open markets in asia to the des