Hong Kong Vulnerable To Financial Shocks, HKMA Warns

by Mary Swire, for Tax-News.com, Hong Kong

30 July 2007

Questioning the status quo is the best way to spot emerging risks in Hong Kong's financial system, according to Monetary Authority Chief Executive Joseph Yam.

Writing in his latest 'Viewpoint' column, Yam stated that Hong Kong must remain alert to potential financial crises, noting that its size - not too big, but liquid enough to attract international capital - and openness makes it more vulnerable than many of its peers in an environment of financial globalisation.

"In a financial system as open and externally oriented as Hong Kong, we obviously should not let our guard down, although for precisely the same reasons it is not always possible for us to control our destiny," he wrote.

Being a financial regulator makes him a "natural worrier", Yam added, although he expressed the belief that the 1997-98 Asian financial crisis is unlikely to repeat itself.

Yam urged people however to remain vigilant, and ask unorthodox questions.

"In any case, the Hong Kong economy seems to be doing well, the financial system to be quite robust, and everybody seems to be having a good time. If there are disruptions, I think it is more likely that they will come from external sources. But still, readers should watch their radar screens because vigilance is a good habit," he wrote.

"It is also a good practice to look behind the screen and ask unorthodox questions, even if you do not always find satisfactory answers. I can assure you that this will have a positive effect on your welfare," the HKMA chief concluded.

Recommended