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More attention to risk management and monitoring, and increased transparency are needed to guard against systemic financial shocks, Hong Kong Monetary Authority Chief Executive Joseph Yam said on Thursday.
In his latest Viewpoint article released on Thursday, Yam said a report prepared by a group of market players in the private sector has rightly stated it is in everybody's interest to prevent systemic financial shocks as far as possible and, if they do occur, to contain and limit their damage.
"Although we are talking about infrequent events, the extensive damage they cause justifies more attention by all concerned, not just policy makers and regulators, but also, and crucially, by financial intermediaries," Yam said.
The report titled "Toward Greater Financial Stability: A Private Sector Perspective" is the product of intensive work by the Counter party Risk Management Policy Group II -- a group of private sector practitioners of leading Wall Street houses.
It identifies three categories of recommendations and guiding principles. Category I are actions that individual institutions can and should take on their own initiative. Category II are actions which can be taken only by institutions collectively in collaboration with industry trade groups.
Category III are actions which require complementary or cooperative action by the official sector.
Yam said: "We will be examining the recommendations and guiding principles in the report in detail and, to the extent that they are relevant to our areas of responsibility and circumstances, will consider how they should be taken forward involving the industry associations as necessary."
"There is a saying that if shocks were anticipated they would not occur. So let us try to anticipate them and enjoy their absence. Reading the report, taking action on the relevant recommendations, and observing the relevant guiding principles will help us do this better," he noted.
(Xinhua News Agency October 14, 2005)
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