Call for back-to-basics finance
Source: Xinhua |
July 5, 2010, Monday
|
Print Edition
Print Edition
FORMER Hong Kong Monetary Authority chief Joseph Yam said finance was for the purpose of supporting the economy, instead of enriching the profitability of the financial institutions, and global finance generally needed to go back to these basics.
"The existence of the financial system is not for the purpose of enriching the profitability of the financial institutions, like the investment banks. They are there to serve the economy and that is something that I think people should remember," Yam told Xinhua in a recent interview.
Yam, who retired in September last year, currently serves as the executive vice-president of the China Society for Finance and Banking, a think tank under the People's Bank of China.
Yam said financial circles were all learning from experiences in the global financial crisis in 2008, which broke out after financial innovations went out of control.
"It was a crisis led by financial innovations. Financial innovations went out of control. Financial innovations serve the interest of financial intermediates, rather than enhancing the efficiency of financial intermediation," he said.
Quite differently, the Asian financial crisis in 1997 resulted from sudden inflow and outflow of too much speculative money and economic overheating in several Asian countries, Yam said.
Both the 2008 global financial tsunami and the Asian financial crisis had led to market failure, which he said could only be put right by intervening in the market.
"And that was what we did in 1997 and 1998, although at that time there were quite a lot of people criticizing us for intervening in the market," said Yam, who had steered Hong Kong through the Asian financial crisis, fending off an attack by speculators on the currency peg between Hong Kong dollar and the US dollar.
The 2008 global financial tsunami had seen all the major economies in Europe and America intervening in the market in quite a big way, he said.
"The existence of the financial system is not for the purpose of enriching the profitability of the financial institutions, like the investment banks. They are there to serve the economy and that is something that I think people should remember," Yam told Xinhua in a recent interview.
Yam, who retired in September last year, currently serves as the executive vice-president of the China Society for Finance and Banking, a think tank under the People's Bank of China.
Yam said financial circles were all learning from experiences in the global financial crisis in 2008, which broke out after financial innovations went out of control.
"It was a crisis led by financial innovations. Financial innovations went out of control. Financial innovations serve the interest of financial intermediates, rather than enhancing the efficiency of financial intermediation," he said.
Quite differently, the Asian financial crisis in 1997 resulted from sudden inflow and outflow of too much speculative money and economic overheating in several Asian countries, Yam said.
Both the 2008 global financial tsunami and the Asian financial crisis had led to market failure, which he said could only be put right by intervening in the market.
"And that was what we did in 1997 and 1998, although at that time there were quite a lot of people criticizing us for intervening in the market," said Yam, who had steered Hong Kong through the Asian financial crisis, fending off an attack by speculators on the currency peg between Hong Kong dollar and the US dollar.
The 2008 global financial tsunami had seen all the major economies in Europe and America intervening in the market in quite a big way, he said.
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