The imminent retirement of Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong marks the end of a remarkable career and an extraordinary era. In the process of finding a successor, the government should take the opportunity to revamp the authority's structure, and review the employment terms of not only the head, but also its senior executives.
The HKMA's primary objective is to ensure the stability of the Hong Kong currency and the banking system while promoting the efficiency, integrity and development of our financial system.
Mr Yam, the only person to run the HKMA since its inception in 1993, has been accused of empire building and setting up a system that provides him with unlimited power and unrestricted terms. He earns far more than any other Hong Kong civil servant and has been dubbed the world's best-paid central banker. Last year, he pocketed HK$12 million, about US$1.5 million, which included basic salary, bonus and other benefits. By comparison, Ben Bernanke, chairman of the US Federal Reserve, the world's most important central banker, earned less than US$200,000. His senior executives have also been accused of being grossly overpaid: his deputies earn about HK$6 million a year.
Apart from ensuring the overall stability of the currency, banking and financial systems, the HKMA also handles a multibillion-dollar investment portfolio, the Exchange Fund, which directly affects the interests of 7 million Hongkongers.
There is no doubt that Mr Yam is a competent and outstanding financial official, but his long career has been marred by the Lehman minibond debacle. He and the authority have been criticised for failing to monitor the sale by banks of complex investment products linked to Lehman Brothers.
The minibond saga has exposed a loophole in the regulatory framework governed by the HKMA and the Securities and Futures Commission. Both bodies have overlapping roles and responsibilities that muddle the monitoring process, creating confusion and inefficiency. The authority could certainly use some house cleaning with the departure of Mr Yam.
