The government has for the first time committed itself to formal monetary policy, with top officials defining their roles in an attempt to remove question marks about who makes key finance decisions. Under the guidelines, Financial Secretary Antony Leung Kam-chung will dictate policy but leave the Hong Kong Monetary Authority (HKMA) to execute the orders. The changes are seen as protecting the authority from political interference since monetary objectives will be codified rather than based on verbal statements. As reported yesterday by the South China Morning Post, the institutional shake-up comes in response to an International Monetary Fund report, also released yesterday, which highlighted confusion about the roles of the financial secretary, the secretary for financial services and the Treasury, and the authority, headed by Joseph Yam Chi-kwong. In an exchange of letters defining the new operating conditions, Mr Leung committed to make public any action that overrode the power of the authority within three months of it taking place. Mr Leung said he welcomed the IMF assessment and said the government had responded to its recommendations. The IMF said Hong Kong's monetary framework could be improved by 'formalising accountability and disclosure procedures in dealings between the chief executive of the special administrative region (SAR) and the financial secretary'. Under new rules, Mr Leung will hold key policymaking powers. Secretary for Financial Services and the Treasury Frederick Ma Si-hang will implement policies. Overlapping responsibilities were highlighted by the recent roll back of Mr Leung's decision to strip the stock exchange of its frontline regulatory role over listed firms. Market players reacted positively to the measures but several said the government should also follow the IMF advice in creating a single corporate regulator rather than maintaining the system that splits the roles between agencies. Hong Kong Society of Accountants president David Sun Tak-kei said: 'There is always speculation that any change of financial secretary or HKMA top officials will lead to a change of the peg-linked system. A written monetary objective will show the government's commitment and increase transparency in the system,' he said. Mr Leung's written monetary objective commits the government to maintaining the pegged link at HK$7.80 to the US dollar. It said that his office held responsibility for the 'monetary policy objective and the structure of the monetary system' while the authority was charged with achieving that end by 'determining the strategy, instrument and operational means for doing so'. Senior officials frequently proclaim their commitment to keeping the pegged link but deep-set deflation, rising unemployment and worsening bank asset quality have caused critics to argue for a more flexible exchange-rate system. On budgetary matters, Mr Ma confirmed that the financial secretary remained the central policymaker on revenue-raising matters and spending decisions. 'Mr Leung is the decision maker and I am the custodian to implement the policies,' Mr Ma said. Democratic Party economic affairs spokesman Sin Chung-kai said the government should go further by introducing a law to clearly define the authority's operation.