To sustain its growth and economic development, China's mainland needs to further use Hong Kong's financial system to develop a market-oriented financial system, Monetary Authority Chief Executive Joseph Yam said Thursday..
In his latest Viewpoint article, Yam said making greater use of Hong Kong's financial system will be in the interest of both Hong Kong and the Chinese mainland.
"It is important for the authorities to develop a relationship between the two financial systems that works in the country's best interest," Yam said.
"From the admittedly narrow perspective of Hong Kong, we see a financial system on the Chinese mainland that mobilizes domestic savings predominantly through the banking system, with such a low rate of return that it is necessary for people to save more and spend less, despite the savings rate already being in excess of 40 percent of GDP," he said.
"We see a financial system that is not as efficient as it could be in allocating funds based on the credit-worthiness of the fund raisers. We see, as I am sure the Mainland authorities also see, a great need to develop a market-oriented financial system to improve financial intermediation - something that is important for sustaining growth and economic development.
"We also see a strong case for making better and more extensive use of Hong Kong's financial system. I believe this is an important element in the relationship between the two financial systems," Yam added.