the driver to take him to his destination. to his amazement, the cabdriver tells him : “ i would love to take you there but cannot, i ’ m afraid ”. “ why not? ”, he asks, flabbergasted. “ there is a local bye - law that says a taxi has to be here at all times. ” “ but a taxi is here. ” “ ah yes, but if i take you home, there would no longer be a taxi waiting here. that would violate the bye - law. ” this is what can happen with statutory minimum requirements. only capital in excess of the minimum requirements is available to truly and independently absorb business risk. in an actual crisis, it is only this capital that can be used to buy the time needed, for instance, to write down impaired assets, adjust portfolios or restructure business units. in an ideal world, of course, such buffers should be built up before systemic events occur. that is the rationale behind capital cushions. they provide a certain breathing space before institutions are forced to unload risky assets and curb their lending. if the buffers are too small, however, the pressure to deleverage during a shock can become overwhelming and cyclical movements may be amplified. this is where public capital assistance comes into play. in theory, it provides a counterweight and reduces deleveraging pressure. getting the basics right : aspects of a european system of banking supervision the reality can be much rougher, however, for a euro - area country that is struggling to cope with the close interlinkages between the sovereign debt crisis and the banking crisis. the stability of the banking sector is then called into question because the country is no longer regarded as being fully capable of resolving its banking crisis unassisted. for such cases, the efsf has clear rules according to which other euro - area countries can step in to help that country. the affected country remains the partner for the donor countries ’ assistance. by providing such assistance, the donor countries are already taking on considerable risks. extending this risk - sharing role, as is being proposed in connection with a banking union – in the form, for example, of a european restructuring fund or a european deposit insurance scheme – would necessitate far more extensive intervention in countries ’ national sovereignty and in their fiscal and economic policies. i hope you will agree with me that joint liability must not be allowed to be introduced covertly through the back door.

in advance of our schedule in satisfying the requirement stipulated in article viii of the imf articles of agreement. in the next five years, china will continue to adopt an appropriately tight monetary policy. the adoption of this policy means firstly, we will have an appropriately tight monetary stance to keep inflation at a level lower than the rate of economic growth. secondly, money supply should grow at an appropriate level. in the next five years, the annual growth rate of m1 will be kept at around 18 % and m2 at 21 % to 23 %. thirdly, reforms and improvements will continuously be made to the approach in making macro - economic adjustment. that is, we will move from reliance on direct control of the volume of credit towards regulating money supply by means of indirect monetary policy instruments such as reserve requirements, open market operations and interest rate policy. appropriately tight monetary policy is not limited to the control of total credit but also adjustment of the credit structure, deepening of monetary reforms, and timely adjustments to the different aspects of the monetary system. an appropriately tight monetary policy is conducive to the healthy, stable and sustained growth of the national economy. it also helps to create favourable conditions for the resumption of sovereignty and the continued prosperity of hong kong. stability in china is the very basis for hong kong ’ s stability while hong kong ’ s stability will certainly enhance economic reform and developments in china. foreign investors in hong kong will, at the same time, benefit from the stability of china and hong kong. those sceptics who have doubted china ’ s commitment to the open door policy no longer can have such doubts after witnessing the implementation of our economic reforms and its achievements. i hope you will recognise that china is firmly committed to implementing the principle of “ one country, two systems ” and maintaining the prosperity and stability of hong kong, just as we have been firmly committed to the implementation of economic reform in china. the principle of “ one country, two systems ” is the realisation of the spirit of our constitution and has become a long - term irreversible national policy. as china continues to pursue its economic reform, hong kong ’ s role as the international financial centre in china will become more and more important. we will do our best to help maintain the existing economic system of hong kong and keep up its economic dynamism. we also hope that the international financial community will join us in our efforts to maintain hong kong ’ s prosperity and stability. ladies and gentlemen, when you