changes now going on in banking services, including the restructuring of fees and charges, are not solely the result of interest rate deregulation. there are a number of factors – global as much as local – that are driving banks into refocusing their business. these include : increased competition from both within and outside the banking industry ; pressure to increase shareholder value ; the need to develop new income streams amid a shortage of conventional lending opportunities ; and globalisation, which is inducing banks to specialise in forms of business in which they have a competitive advantage. these various factors are forcing banks to innovate - through new products and new technologies – in order to diversify their income. they are also forcing banks to become more cost - efficient : to scrutinise the profitability of their various services, and to rationalise cost structures. the result in many cases has been substantial changes in retail banking services : for example, the selling off of business units, the closing down of branches, the expansion into fee - based business, such as mpf and insurance services, the development of more cost - effective modes of service delivery, such as the atm network and the internet, and the imposition of specific fees and charges on services that did not incur fees and charges in the past. consumers also need to react to the changing environment – for example, through making use of delivery channels such as atms, telephone banking or the internet that reduce the cost of using banking services. cost minimisation also provides the incentive for consumers to shop around, and new technology in the form of the internet enhances the means of doing so. with the shopping around comes awareness of what else is on offer, and greater expectations on the part of the consumer. less positively, there has been disruption and anxiety, which has been reflected in the steadily growing number of complaints and protests, and in the greater political attention being paid to this subject. what is the stance of the hkma? we do not, as i have already said, regulate fees and charges. but we seek to ensure that there is transparency in the provision of services, particularly in the setting out of fees and charges. the code of banking practice, which is a non - statutory code issued jointly by hkab and the dtc association with our endorsement, is the main tool for achieving this end, and, as you all know, the code is currently being subjected to extensive revision and strengthening. this process is almost at an end and we believe

bank of japan presents summaries of articles in the february edition of its quarterly bulletin bank of japan, communication, 27 / 2 / 98. response to the disclosure framework for securities settlement systems : the - boj - net jgb services introduction this document provides answers to the “ disclosure framework for securities settlement systems ”, a survey questionnaire drawn up by a joint working group of the committee on payment and settlement systems ( cpss ) of the bank for international settlements, and the international organisation of securities commissions ( iosco ). the securities settlement system ( sss ) here is the “ bank of japan financial network system ( boj - net ) jgb services ”, which is the japanese government bonds ( jgb ) settlement system in japan. the answers as prepared by the operator of the system, the bank of japan, are intended to help current and future participants in the settlement system to appropriately understand and assess the risks associated with it. the answers provide basic information about the boj - net jgb services as they were in october 1997 ( when the answers were prepared ). the boj - net funds transfer system is also referred to where necessary. please note that the answers are intended to provide a general explanation, and the information may not apply to every individual case. utilization of financial institutions ’ self - assessment in enhancing credit risk management summary the government ’ s prompt corrective action ( pca ) measures to be implemented from april 1998 require financial institutions to conduct adequate assessment of their assets and to calculate appropriate ” loan - loss write - offs and provisions ” based on their own internal rules and referring to guidelines of the authorities. the japanese “ big bang ” reform package is expected to be conducted by the year 2001. given these situations, large financial institutions in japan are making great efforts to enhance credit risk management. medium and small - sized financial institutions are on their way to establish basic credit risk management systems under the pca measures. since information derived from self - assessment can be useful in a wide range of activities from strengthening risk management systems to formulating business strategy large differentials in business management are likely to arise among financial institutions depending on the utilization of this valuable information. the bank of japan introduced the tracing method of asset assessment and loan losses in order to support financial institutions to maximize the use of their own assessments as a management tool. the tracing method is used to observe changes in the condition of individual assets in a time series and is one way to utilize financial institutions ’ self - assessment of