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LCQ14: Appointment of the Monetary Authority

     Following is a question by the Hon Emily Lau and a written reply by the Financial Secretary, Mr John C Tsang, in the Legislative Council today (November 26):


     Section 5A(1) of the Exchange Fund Ordinance ("EFO") (Cap. 66) provides that "The Financial Secretary shall appoint a person to be the Monetary Authority on such terms and conditions as he thinks fit" but the tenure of office and retirement age of the Monetary Authority ("MA") is not specified in the Ordinance.  The Government advised in its paper to this Council in April this year that "The legal provision in the EFO allows maximum flexibility for the Financial Secretary ("FS") in determining the appropriate conditions on which the MA is appointed", "FS, in considering the MA's appointment, will take into account all relevant factors such as... the views of the Governance Sub-committee of the Exchange Fund Advisory Committee as appropriate".  In this connection, will the Executive Authorities inform this Council:

(a) whether the incumbent MA, who is presently over 61 years old, will retire in September next year, and what criteria the authorities used in determining his retirement date;

(b) whether it will conduct a review on the appointment mechanism for MA; if it will, of the details; if not, the reasons for that;

(c) given that the existing legislation allows maximum flexibility for FS to handle MA's appointment, how the authorities ensure transparency and accountability of the mechanism; and

(d) whether the authorities will make reference to the appointment arrangements for central bank heads in major overseas economies, including the United States, the United Kingdom, the European Union, Australia and Japan, and stipulate in the relevant legislation the tenure of office of MA as well as the criteria for determining his remuneration; if they will, of the details; if not, the reasons for that?



     Section 5A of the Exchange Fund Ordinance (EFO) provides the Financial Secretary (FS) with adequate flexibility to determine the appointment of the Monetary Authority (MA) and the related terms and conditions.  When making the appointment, the FS will consider a number of factors, including competence, experience, expertise and age of the candidates.  EFO places no restriction on the FS or the Administration reviewing the appointment of the MA and the related arrangements.

     The FS will take account of the views of the Governance Sub-committee of the Exchange Fund Advisory Committee in assessing the performance of the top management of the Hong Kong Monetary Authority and make an appropriate decision.

     The administrations of different countries will make arrangements in accordance with their own laws, political systems and historical background. The arrangements in Hong Kong have been found effective and suitable for our situation.

Ends/Wednesday, November 26, 2008
Issued at HKT 11:55


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