The financial system in HKSAR is resilient, sound and overseen by a comprehensive supervisory framework, according to a major assessment published by the International Monetary Fund (IMF) today (June 27).
In its Financial System Stability Assessment (FSSA), based on a Financial Sector Assessment Programme (FSAP) review of HKSAR's financial system conducted in the second half of 2002, the International Monetary Fund (IMF) concludes that "the Hong Kong SAR financial system is robust and fundamentally sound". In particular, the IMF considers that -
"(a) the financial system of Hong Kong is resilient, sound and overseen by a comprehensive supervisory framework. The financial system has shown strong resilience both in the face of external shocks and during the cyclical downturn;
(b) the financial markets are well developed, liquid and efficient, providing a wide range of products and services;
(c) the market infrastructure comprises the necessary components to support the efficient functioning of the financial markets. The payment systems, in particular, are efficient and support the operation of the wholesale markets for money, foreign exchange and securities transactions; and
(d) the supervisory system is well developed by international standards, which is characterized by transparent regulations, a strong reliance on the rule of the law and free and competitive markets."
The IMF also notes that HKSAR's adherence with international financial sector standards and codes is strong, mostly reflecting the role of HKSAR as an important international financial centre, even though further improvements in certain areas would be desirable. The HKSAR also has a comprehensive legal and supervisory framework for anti-money laundering and combating the financing of terrorism.
The Financial Secretary, Mr Antony Leung, said, " We welcome the comprehensive assessment conducted by the IMF- FSAP Mission on the regulatory arrangements, financial infrastructure and the financial stability policy framework of Hong Kong. The IMF's positive assessment of Hong Kong's financial system and financial sector policies is recognition of the efforts made by the Government and the regulators in recent years."
"As an international financial centre, Hong Kong will continue the efforts to strengthen and upgrade the financial infrastructure and regulatory framework. Where appropriate, the Government has taken steps to respond to the Mission's suggestions for further improving Hong Kong's financial framework," Mr Leung said.
Steps taken include improving the transparency of the financial stability policy framework by publishing the terms of reference of the Council of Financial Regulators and the Financial Stability Committee, and publishing an official document to delineate clearly the roles and responsibilities of the Financial Secretary and the Secretary for Financial Services and the Treasury in relation to the management of financial affairs and public finance. The document can be found on the websites of the Financial Secretary Office and the Financial Services and the Treasury Bureau. The Financial Secretary has also exchanged letters with the Monetary Authority to delineate more clearly their roles and functions in monetary and financial affairs.
The FSAP is a joint IMF-World Bank programme. It provides a diagnosis of the development needs of a member jurisdiction (particularly in respect of the safety and soundness of its financial system), thereby helping to enhance the member's ability to reduce the likelihood and/or severity of financial sector crises.
In February 2002, the Government agreed to HKSAR's participation in the FSAP in the second half of 2002 as Hong Kong, being an international financial centre, always approaches the international assessment with a positive and open attitude, and stands up to scrutiny.
The FSAP Mission visited Hong Kong twice in October and December 2002. After the completion of the FSAP assessment on Hong Kong, the FSAP team has complied a summary report called the Financial System Stability Assessment (FSSA). The FSSA includes both a report by IMF staff on Financial System Stability and Summary Assessments of Observance of Financial Sector Standards and Codes of Hong Kong.
The FSSA was published today by the IMF after the endorsement by its Executive Board on May 16, 2003 and can be obtained from the Financial Services and the Treasury Bureau's website [http://www.info.gov.hk/fstb/fsb/report/index.htm] or the IMF website at [http://www.imf.org]
End/Friday, June 27, 2003