Financial Secretary Antony Leung Kam-chung seems to need a closer understanding of two words in the English lexicon - 'obstacle' and 'howler'. 'Obstacle' is what he said, 'howler' is what it was. Specifically, what he said on Thursday in a chat with some reporters is that the Hong Kong dollar's peg to the US dollar was an obstacle to an efficient economy. Now this may have been translated from Cantonese and I do not proclaim to be an expert on the nuances, but friends tell me that 'obstacle' is an accurate translation of what he was quoted as saying in the Chinese press. He then further said the Government would not abolish the peg as this would invite speculation against the local currency. Wrong, sir. What invites speculation against the Hong Kong dollar is high-placed Government officials casting doubt on whether we really need the peg. Calling it an obstacle to an efficient economy does exactly that. The rule is one that all high-placed Government officials have observed until you came along, Mr Leung. When asked about the peg what you say is that it has served us well and that you see no reason why anyone should think of abolishing it. You then shut your mouth. I would be surprised if the chief secretary has not already rapped your knuckles to tell you exactly that by now. But there is, in fact, a way that currency arrangements could be made an obstacle to an efficient economy. It could be done by adopting a floating exchange rate rather than the linked one we have at the moment. What this would do is give all the big spenders in Government (read Chief Executive Tung Chee-hwa and his associates) endless scope for dabbling with exchange rates and interest rates as bandage solutions to the dire aftermath of wasting money on big white elephant projects for which they have such a failing. Count on it that if we had not had a hard link to the US dollar in place when the handover to Chinese sovereignty came in 1997 then we would now be in a much worse predicament than we find ourselves. What the peg did was enforce needed disciplines on Government officials who, left to their own devices, have a tendency of shying away from them as the pressures 'to do something' mount. The peg enforced those disciplines on them as much in 1997 as in 1983, when it was adopted. They could not play around with the exchange rate. It was fixed. They could not play around much with interest rates. These were largely dictated by United States' rates through the peg. They pretty much had to let natural forces take control. Natural forces then brought property values and share prices down to more reasonable levels and gradually reduced the relative over-pricing from which we suffered in consumer goods. Yes, it was painful but that pain was inevitable anyway. As a result we have the soundest financial system in all of Asia and an economy that may be on the retreat again but is causing us nowhere near the distress so many of our Asian neighbours still suffer from having political leaders who dabbled at will in things they at best only dimly understand. You may argue that Mr Tung's administration could have done more to relieve the pain we suffered in the Asian financial crisis if it had not been so hemmed in by the peg. No-one will ever know for sure but I doubt it. Judging by what governments did elsewhere it would probably have relieved some of the symptoms but left us still suffering badly from the basic illness. That peg is no obstacle, Mr Leung. It has proved the route to a sounder economy than we could otherwise have expected. The obstacle is yours and it was a howler.