pointed out the differences between an asset - price bubble and a bull market. the author was of the view that people who don ’ t manage to enter the stock market in time or don ’ t dare to do so when the market has gone up will regard it as a bubble and will support the government taking measures to cool things down ; but investors who have entered the market will see the increases as a bull market. price increases can be interpreted in many ways. well, a nonmainstream view like this may have some merit and, right or wrong, it illustrates the difficulty of dealing with asset - price bubbles, particularly the courage needed to make decisions at critical moments. whether these decisions are correct or not is difficult to say with total confidence and certainty beforehand, and mistakes may be made. but we cannot avoid mistakes by not making decisions because the damage to society of an asset - price bubble is too great to ignore. and we should not just rely on the government to stop the bubble expanding. it requires the involvement of banks, corporations and individuals – they need to be more risk - conscious and self - disciplined. my colleagues at the hkma and i will do our best, and i invite everyone to work hard together to meet the challenges brought about by the global financial tsunami.

other, the monetary transmission mechanism of asian economies and their monetary reactions to internal and external shocks are also quite different. 43. how then should asian economies pursue asian monetary co - operation? the extent of the diversity of economies in asia points quite clearly to one conclusion and this is that monetary integration is inappropriate, at least for the time being. one can perhaps get a better appreciation of this argument by attempting to apply the maastricht criteria for european monetary union to asia. thus realistically asian monetary co - operation will have to be pursued under a multi - currency environment. asian monetary co - operation is not about monetary integration. the situation argues for monetary segregation, even to the extent, in the case of china, of maintaining two currencies in one country : the renminbi for the mainland of china and the hong kong dollar for the hong kong special administrative region. again apply the maastricht criteria to the mainland of china and hong kong and you will come quickly to the conclusion that the “ one country, two currencies ” arrangement is a sensible one. it is essential if hong kong is to continue to be stable and prosperous as an international financial centre, as provided for in the basic law of hong kong. 44. moving along the spectrum for monetary co - operation from the extreme end of monetary integration, we could consider whether some form of monetary policy co - ordination in asia is appropriate. so far, however, there seems to be a lack of interest amongst monetary authorities in asia in promoting this. perhaps there has been no such need identified. monetary sovereignty has been carefully guarded in this region. there is also concern, i suppose, on the likelihood of dominance in such co - ordination by the more influential economies in terms of size and financial clout. there has therefore been no attempt to identify the pros and cons of monetary policy co - ordination in asia. the subject has not even featured in any of the discussions amongst the regional central bank groups that i know of. but one must of course keep an open mind on the subject. the contagious turmoil in the currencies and financial markets of asia will i am sure stimulate some interest in it. without pre - judging the outcome, i expect some initiative in putting the matter on the agenda for future discussions amongst monetary authorities in the region. 45. by contrast, there is a great deal of enthusiasm amongst monetary authorities of the region to promote asian monetary co - operation when this does not inhibit the freedom