me also comment on a few other outstanding matters. first is the vexed question of the approval of managers. i must confess we have been a little taken aback by some of the reaction to this proposal, which seems to question our motives for seeking such a power. all i can say is that we have no ulterior motives. we simply feel that if individuals are to fill important positions in banks then steps should be taken to ensure that they are fit and proper for the position. clearly it is the banks ’ responsibility to select individuals and satisfy themselves as to their credentials, and you can be assured that we have absolutely no desire to second - guess these decisions. however, it is a fact that we may, on occasion, have access to information on an individual which the bank does not have. we would see ourselves, therefore, as acting as very much a second line of defence – and only in exceptional cases. a number of banks see the logic in this and support our proposals. others remain less enthusiastic. but we are consulting the industry further on this and i hope that something that is acceptable to all can be arrived at. 11. next is the issue of the review of the code of banking practice, in relation to which it is suggested in david ’ s letter that some people are unhappy about the stance taken by the hkma. on this, i am afraid, i have rather less sympathy than on other issues with those who raise concerns. i do not believe that any of the changes promoted in the working group, such as in relation to credit cards and also to fees and charges, are unreasonable. indeed, most banks seem to have accepted the rationale for changes such as the $ 500 card loss limit, which brings hong kong into line with international practice. i believe that the banks must appreciate that issues relating to terms and conditions and other aspects of customer service are a legitimate matter of public interest and concern. in the past, it is true, the hkma has not been as closely involved in consumer matters. this, however, is something that is changing, not because we particularly desire it but because it seems to be what the public expect. we plan, therefore, to review our involvement in this area so as to determine exactly what our role should be. 12. finally, there have been concerns expressed that the hkma ’ s supervision has become more intrusive and that requests for information are sometimes excessive. this is certainly something we are aware of, however i should point

consultancy report published a year or so ago which are still being progressed. for example, later this year we will consider whether there should be some further relaxation of the restriction on the opening of branches by foreign banks which have entered the market since 1978. we also plan to review whether the three - tier system of authorisation might be reduced to two tiers, although we do not plan to visit this issue until next year – i. e. 2002 - and have quite an open mind on this. this is rather later than we originally intended. but it reflects the fact that we believe that the present system is working reasonably well and that there is no pressing need to change. we are also heavily preoccupied with deposit insurance and the outcome of that exercise may influence the way in which the three tier structure is modified – most obviously, whether the deposit threshold for dtcs should continue to be set at $ 100, 000. 8. also on the back burner for the time being is consideration of whether there should be any change to the minimum paid - up capital requirements for locally - incorporated ais. this obviously is tied in to some extent with the reform of the three - tier structure, as if we did amalgamate the rlbs and dtcs into a single class we would have to decide what the minimum paid - up capital requirement for the class should be. this is something we will have to consider in due course, but we are of course well aware that a higher requirement would have implications for some of the smaller dtcs, and we will certainly have regard to this. aside from any change related to the reform of the three - tier structure, we don ’ t at present have any other plans in relation to the minimum capital requirements, although at some point we may want to consider updating them in line with inflation. 9. on the third initiative i mentioned, the credit reference agency, some of you may know that we have established a working group to take this initiative further. the consultation we conducted indicated that there was quite widespead support for such an agency, although having said that it is fair to say that there was quite a diversity of opinion on various aspects. the working group will investigate this further and try to arrive at a recommended way forward. but we hope that something can be done in this area, as most seem to agree that such an agency would be beneficial. 10. so that brings me to the end of what i see as the three main initiatives, but let