FOR Joseph Yam Chi-kwong, chief executive of the Monetary Authority, putting the territory's central bank on a smooth running track as soon as possible is his priority. Mr Yam said the bank had no time to waste. ''The cyclical movement in exchange rates means that there is always a risk in creating a bubble economy out of asset price inflation. The better mechanism we have in place, the better we can withstand its shock on the financial system,'' he said. He said the global financial system was undergoing an evolution, creating many derivative products, the risk of which could not be easily surmised. ''We need to keep up with the mechanism for risk management,'' Mr Yam said. In addition, the rapid and bumpy economic road China had embarked on would, from time to time, have much impact on Hong Kong. ''The sooner we equip ourselves, the better,'' he said. However, since central banking is different from commercial banking, the skills required cannot be clearly identified in the private sector, thus creating a stumbling block in recruiting staff for the authority. How big does Mr Yam want the central bank to be? ''Singapore's economy is only half of Hong Kong's but its central bank is twice our size,'' Mr Yam said, adding that he would not double the existing staff of slightly more than 300. ''Small is good. I am not somebody who wants to build an empire,'' he said. The Monetary Authority was established in April last year, with terms and conditions of employment separate from the Government. ''Previously, working within the Government's budget, it was difficult for us to convince the Government that the priority for a money market dealer was higher than a social worker. That has confined our development,'' Mr Yam said. Now, equipped with a revised set of employment conditions, it has started competing with the commercial sector for quality personnel in economic research and money market dealing. With a view to enhance the authority's international image and adopt a more co-ordinated approach in dealing with overseas central banks, the new External Department will handle all external relations. It will also seek to beef up its research team, which has been the weakest area. ''Research is very important in the field of monetary management because theories and practices are not too far apart,'' Mr Yam said. With annual salary packages of about $700,000 for economists with five years' experience and $400,000 for those with three years, the central bank has recruited economists from the local banking sector. But one economist said the package might not be attractive enough to draw quality people from the commercial sector. ''Whether the package is competitive depends on what company you are from. If the economist is working for a broking firm with a high bonus payout, the Monetary Authority's offer does not look attractive. But for those working in a bank which does not pay as well as a broking firm, the package is not bad,'' the economist said. Mr Yam said the salary range of each rank had been widened and there was more overlap between ranks, giving the authority more flexibility in recruitment. For those government employees working under the authority, switching over from the Government can be difficult. On top of the basic salary, civil servants are paid allowances in the form of housing, education and passage. ''For those who are enjoying those allowances, our package may not be that attractive. But if one has his or her own flat and the children are studying in Hong Kong, our package is a good way to cash in those allowances,'' Mr Yam said. To tackle staff shortage, the authority has initiated a two-year ''manager trainee programme'' to take in fresh graduates, giving them exposure in at least two departments before formally employing them as managers. The authority will continue to recruit staff from the Bank of England. ''We do not want to distinguish between locals and foreigners. We want to find the people with the right skills and expertise,'' Mr Yam said. The Bank of England, as one of the most prestige central banks in the world, could supply talent specialised in banking supervision and financial market development, he said.