time when membership of the tma is seen as confirmation of professional expertise in the field. credible training and continuous professional development programmes, comparable to those of other professional bodies, will bring the recognition that the treasury market business deserves as a distinct branch of the financial industry. 5. the second area where the tma will be active is market development. treasury markets, like all financial markets, are never static : they are vibrant and dynamic. to maintain our competitiveness, we should proactively identify and respond to opportunities arising from this dynamism. and, looking around us, it is not difficult to see that the mainland is an important source of dynamism and opportunities in the years to come. hong kong, with its location, mature and efficient markets, pool of professional talent, as well as its many links to the mainland, has a clear advantage in tapping this huge potential market. one of the priorities of the tma, therefore, is to establish a close relationship with its counterparts and regulatory authorities on the mainland, and to contribute to the development of the treasury markets in the mainland. i believe that this will provide enormous business opportunities for market participants in hong kong and further strengthen our role as an international financial centre. 6. the third important area of work for the tma will be to develop and promulgate codes and standards that are widely accepted by market participants, and in line with best international practices, to help the treasury markets function smoothly. the tma will continue the work of the tmf in reviewing and developing codes and standards for the industry in the light of the development in the local, mainland and overseas markets. one example of work in this area is documentation in chinese, which will be essential as hong kong explores new business opportunities on the mainland. 7. lastly, for hong kong to aspire to be the preferred hub for treasury market businesses in the region, we need to market ourselves well. the tma will therefore have to pay attention to publicity and communication, not just in hong kong but also in the region. it will be very important for the tma in the years ahead to raise its profile, and strengthen and broaden the ties previously established by the tmf with counterparts in the major market centres around the world. 8. establishment of the tma allows a wide range of institutions and practitioners in the foreign exchange, money markets, debt, derivatives and other treasury markets to pool their efforts towards a common aim. while the tma is newly

joseph yam : banking sector risks and challenges luncheon talk by mr joseph yam, chief executive of the hong kong monetary authority, at the hong kong institute of bankers, hong kong, 16 june 2004. * * * the turnaround thank you for inviting me to talk to you today. it is a pleasure to be here and i am delighted to see such an enthusiastic attendance. i was recently looking over past speeches ( not, let me assure you, with the aim of recycling them ), and i noted that the last time i spoke at one of the institute ’ s lunches was on 24 october 2001. this has prompted me to reflect on how much we have all been through over the past 32 months - both as a financial community and in the larger community. when i last spoke to you the world was just six weeks on from the 9 - 11 attacks. there was a strong sense that we were heading for difficult times, with a worsening global environment, and with deepening deflation, unemployment, a budget deficit, falling asset prices and a rising number of negative equity mortgages within hong kong. conditions were likely to get worse before they got better, i concluded. well, after a period of great difficulty, in which things got considerably worse than i think any of us had imagined, conditions are now at last improving. since around the middle of last year hong kong has been enjoying a strong and broadening recovery. the economy has now regained much of its dynamism. the key economic numbers are providing the confirmation. economic growth has been impressive. the unemployment rate has been coming down, albeit slowly. deflationary pressure has been easing. the external sector has been active and we are running a substantial current account surplus. the residential property market, on which the wealth of many in our community depends, has bottomed out from a falling trend that had lasted for over five years. domestic consumption has been picking up. of more direct interest to us in the hkma, the risks to monetary and banking stability, which had been worrying us for some time, have receded. the very fast dissipation in the number of cases of personal bankruptcy and negative equity mortgages is very welcome indeed. the turnaround in the hong kong economy and, consequently, the improvement in the asset quality of banks, were made possible by the more favourable global economic environment and by measures taken to strengthen economic ties between hong kong and the mainland. indeed, banks in hong kong have also