Not won over by Yam's arguments
Joseph Yam Chi-kwong is an honest person.
I once praised him, through these columns, for his 'honesty in admitting being slow in problem recognition'. With his recent exposition on the future of Hong Kong's monetary system, I observe further instances of his candour.
It took him almost three years after retirement from the top post in the Monetary Authority and nearly 30 years since the institution of the city's fixed exchange rate system which he helped implement, to begin thinking about alternatives to the arbitrary linkage between our currency and the US dollar, the currency of a socially different and politically unconnected economy.
We pay economic and socio-political costs for the stability of the fixed exchange rate system. Since its inception, the relevant question about the peg has been when and how it can be abolished, and not whether. We would have thought that quantitative analysts and financial gurus in the Monetary Authority regularly run simulations for risk-return assessment and scenario analyses for re- and un-pegging. But this apparently was not the case when Mr Yam headed the authority.
Now he recognises that 'the structure of Hong Kong's public finances lacks a theoretically sound foundation' and tries to share his experiences of a long career in monetary affairs for public discussion.
His prolix discourse, characterised by a surfeit of trivialities, contains little useful insight. He dwells on ancillary issues about the peg rather than attacking the core problems of ways to make better use of the peg and better preparations for its eventual removal.