Speech by CE at Boao Forum for Asia

“As leaders in business and government in Asia, we have a responsibility to ensure that the rapid economic growth we are enjoying and sharing is balanced, stable and sustainable,” said the Chief Executive, Mr. Donald Tsang, at the Luncheon Session on Asian Financial Integration at the Boao Forum for Asia's Annual Conference 2006 held in Hainan Province in late April.

“Few cross-boundary challenges are more meaningful and important than the promotion of financial integration in the Asian region,” said Mr. Tsang. Pointing out that it is not necessary to reach a consensus now on monetary union as a final goal, he said there were five areas where financial integration could bring benefits without committing individual jurisdictions to something that may be politically difficult to deliver.

Mr. Tsang outlined these areas as:
• Linking financial infrastructures across jurisdictions to facilitate the safe and efficient flow of funds across jurisdictions arising from the many trade, investment and other transactions taking place on a day-to-day basis. 

• Relaxing restrictions on access of foreign financial intermediaries to domestic financial markets, in order to build greater diversity of providers of financial services. 

• Harmonization of financial standards within the region to bolster the confidence of all investors so that more of the investment funds originating in Asia would feel more comfortable staying here.

• Strengthening co-operative efforts between jurisdictions in developing their domestic financial systems.

• Promoting greater cross-boundary capital flows, which for some would mean relaxing capital controls, to achieve greater efficiency in the allocation of financial resources in an international dimension. 

Mr. Tsang acknowledged that the region’s cultural and geographic diversity presents an extra challenge to integration, but, in his view, it makes it all the more worthwhile. “Whether greater regional financial integration will ultimately lead to a common Asian currency is, perhaps, a question that many of us will not be able to answer in our lifetimes, he said. “But at least the subject is now attracting discussion in wider circles, which is encouraging. 

He expressed his belief that, in driving Asia's growth to the next level, “we should focus on the quality of growth and aim to make it more balanced, stable and sustainable.

“When Asian finance is better organized,” he said, “we will collectively be less vulnerable to sharp and costly disruptions to economic progress. With enhanced efficiency in financial intermediation and greater financial stability, growth will become more sustainable - and the people we serve will feel more confident about spending more and saving less, thus achieving more balanced growth.” 

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