mr latter takes a central banker ’ s look at new challenges in a rapidly changing environment speech given by mr tony latter, deputy chief executive of the hong kong monetary authority, at the asian treasury forum 2000, held in hong kong on 22 - 23 february 2000. * * * there was a time, many years - or more likely decades - ago, when it seemed that the main role of the company treasurer, if indeed there was any such identifiable position in the company, was to make sure that enough money had been transferred from time deposits to current account before each month ’ s pay day ; and it seemed that the main, possibly the only, function of a company ’ s finance director was to make sure that the accounts were compiled, audited and filed on time. how times have changed. not only has there been a ceaseless escalation in the range and complexity of financial instruments available to us all, and in the sophistication of accounting, but there has also been an inexorable rise in the expectations which others, such as shareholders or executive boards, have as to what can be delivered from the financial side of a business. as a central banker i feel some empathy with those who find themselves sandwiched between pressure on one side from their masters to achieve ever lower funding costs or ever better returns from financial investments, and persistent enticements on the other side from bankers claiming that you could be freed of all that pressure if you simply subcontracted everything into their capable hands. treasury has come to be regarded in many instances as a separate profit centre. the treasurers of some major corporates are nowadays acknowledged as being at least as significant players in the financial markets as are the banks themselves. there are some well - known examples where the profitability of an enterprise in the manufacturing or services sector has been sustained by deft treasury and financial management for considerable periods when the mainstream business has itself been floundering. and there are also examples, alas, where reputable companies have been brought to their knees by flawed financial management. you probably don ’ t have an easy life, but you won ’ t need me to tell you that. i find myself wondering whether or for how long the financial scene will continue to be one of such rapid change as we have been witnessing in recent years ; and what the implications are, for any or all of us here, of recent and prospective developments in financial products and infrastructure. it is difficult to put a starting date on

such as the economic variables on which policy should focus, or in other words, the choice of intermediate objective. in some countries, germany among them, policy is targeted at a monetary aggregate, while in others a strategy of direct inflation targeting is pursued. alternatively, monetary authorities may focus on a range of economic indicators, as is done in the united states. i will not go into the pros and cons of these methods here today. in the european context, the emi has concluded that in practice the differences between the various policy strategies that could be pursued by the escb are not as large as in theory. a decision is to be taken by the ecb on this point next year. 3. looking at the structure of the fed, we see three components, specifically the board of governors, the regional reserve banks and the federal open market committee ( fomc ). the fomc issues a periodic guideline for monetary policy, while the board serves as the executive body. it is empowered to adjust policy, within the mandate provided by the fomc, when necessary in the period between fomc meetings. thanks to a rotation system, the reserve banks are involved in fomc decision - making on an alternating basis. the american legislature obviously meant the fed to have a decentralized structure, in which the regional reserve banks can each have their say. the aim was to prevent fed policy - makers from catering unduly to the wishes of either the financial centre, i. e. new york, or the political hub, i. e. washington. in spite of the decentralized nature of the federal reserve system, however, a certain specialization tendency has increasingly developed over the years, due in part to technological innovations and market developments. take, for instance, the operations ensuing from the fed ’ s monetary tasks, such as money and foreign exchange market interventions. these are effected in their entirety in new york. in other areas, too, such as the payments system, the reserve banks have developed their own specializations. 4. in determining monetary policy, the fed relies on regional input. the reserve banks contribute to policy through their role in the discussions and the number of votes they can cast ( five out of a total of twelve ) at fomc meetings. at these meetings no fixed policy proposals are presented in advance, the aim being an open discussion where the various parties reach agreement through mutual persuasion. any decision should, after all, be endorsed by as