立法會

立法會CB(1)1106/98-99號文件
(此份會議紀要業經主席審閱)

檔 號: CB1/PL/FA/1

財經事務委員會特別會議紀要

日 期 :1998年11月14日(星期六)
時 間 :上午9時
地 點 :立法會會議廳

出席委員 :

劉漢銓議員(主席)
李家祥議員(副主席)
丁午壽議員
朱幼麟議員
何秀蘭議員
何俊仁議員
吳亮星議員
吳靄儀議員
夏佳理議員
涂謹申議員
張永森議員
許長青議員
單仲偕議員
曾鈺成議員

其他出席議員 :

何鍾泰議員
李永達議員
劉慧卿議員

缺席委員 :

田北俊議員
李國寶議員
張文光議員
陳智思議員
黃宜弘議員
霍震霆議員
馮志堅議員

出席公職人員:

財經事務局首席助理局長(證券)
陳秉強先生

財經事務局首席助理局長(銀行及金融)
鄧詠菁女士

香港金融管理局貨幣政策處處長
趙潔儀女士
應邀出席者 :
議程第I項

捍衛聯匯研究小組

香港科技大學
財務學系教授
陳乃虎教授

香港大學
經濟金融學院助理教授
陳永豪博士

香港科技大學
工商管理學院院長
財務學系教授
陳玉樹教授

香港科技大學
工商管理學院副院長
財務學系系主任及教授
陳家強教授

香港科技大學
經濟發展研究中心主任
經濟學系副教授
雷鼎鳴博士

香港科技大學
經濟學系系主任及教授
鄭國漢教授

香港城市大學
經濟及金融系副教授
關蔭強博士

議程第II項

香港浸會大學
經濟學系教授
曾澍基教授

議程第III項

香港大學
經濟金融學院教授
饒餘慶教授

議程第IV項

香港中文大學
經濟學系系主任
宋恩榮教授

議程第V項

香港城市大學
商學院院長
金融學講座教授
亞太金融市場研究中心主任
何炘基教授

議程第VI項

芝加哥大學
工商研究院教授
默頓‧米勒教授
列席秘書 :
總主任(1)4
陳慶菱女士
列席職員 :
助理秘書長1
吳文華女士

高級主任(1)1
司徒少華女士

捍衛聯繫匯率制度的機制
主席表示,事務委員會舉行一連串特別會議,研究捍衛聯繫匯率制度的機制,這次是
其中的第二次會議。是次會議分 6節進行,事務委員會會與個別學者或由學者組成的
小組會晤,聽取他們就此項議題發表意見。在每一節中,應邀出席者會首先扼要發表
意見,然後回答議員的提問。主席請議員參閱各位學者於會議舉行前所提交的意見書。

I 捍衛聯匯研究小組
(立法會CB(1)461/98-99(01)號文件)

2.捍衛聯匯研究小組(下稱"聯匯小組")認為,香港金融管理局(下稱"金管局")自1998年9
月推行的7項技術性措施是方向正確的措施,並已處理以往實施的貨幣發行局制度的
一些缺點,該等缺點被視為引致利率波動,因而使香港出現經濟不景。此外,將外
匯基金債券及票據轉為銀行體系的結算餘額,可使貨幣基礎由20億港元增至約 320
億港元,此舉可在不會導致高利率的情況下,消化較大額資金流出所造成的震盪。
金管局在9月15日作出承諾,表示兌換保證於未來6個月內有效。這項保證相當於為
期6個月的匯率保險或為期6個月的認沽期權,此亦即分別與聯匯小組或默頓‧米勒
教授一直倡議的論點不謀而合。當局作出兌換保證的承諾將可恢復市場對港元的信
心。事實上,在 1998年9月15日至17日期間,銀行體系的結算結餘總額的淨額增幅
為10 億港元,此點足以證明在推行這項額外措施後,市場的信心得以恢復。

3.為解決金管局的措施的不足之處,聯匯小組建議重組本港的貨幣發行局制度,並將
現時銀行體系中的信貸供應與貨幣基礎連繫起來。市場利率應由經濟體系中的信貸供
求決定。此外,該小組建議當局按外匯儲備的各項功能,公開及全面地分配外匯儲備。

4.至於維持聯繫匯率制度是否適當的做法,聯匯小組強調,由於港元與美元脫鈎或會
即時導致港元出現信心危機,因此為了本港的經濟體系著想,目前絕對有必要維持聯
繫匯率。然而,當局需要制訂其他策略,以應付一旦出現重大的危機。如果港元的貨
幣體系完全崩潰,當局最後可採取美元化的方案。因此,當局應就此方案的可行性及
實施時的技術上問題,進行更多研究。

5.李家祥議員關注按各項功能分配外匯儲備的建議,或不能有效抵禦對港元的嚴重狙
擊。陳家強教授在回應時指出,在本港傳統的貨幣發行局制度下,外匯儲備在捍衛港
元和打擊炒賣港元活動方面所擔當的重要角色,未能有效發揮,因為資金流出並不是
透過外匯儲備相應下降而得以抵銷,而是透過調高利率來吸引資金流入。根據聯匯小
組的建議,當局可訂定清晰的規則,規定按以下各項功能分配龐大的外匯儲備,例如
以外匯儲備用作支持流通的紙幣和硬幣、支持貨幣基礎、作為不時之需及用以紓緩資
金流出的影響,以便市場人士可獲得正確的信息,對各種情況作出適當的反應,同時
,這亦有助不會因少量資金流出而出現不必要的恐慌。此舉可充分發揮以外匯儲備來
捍衛港元的作用。

6.何俊仁議員關注私營機構發行的債券不獲貼現窗接納,此項限制會對本港債務市場
的發展造成負面影響。陳家強教授表示,有需要規定貼現窗只可接納外匯基金債券及
票據,因為該等基金債券/票據由外匯儲備提供十足支持。金管局應只在有資金流入
的情況下,才發行新的外匯基金債券/票據。

7.陳乃虎教授被問及金管局在推行新措施時,應否保留若干權力,他認為,金管局應
盡可能避免行使酌情權,以免此舉會有損該等措施的成效。例如,酌情釐定基本利率
會對外匯基金債券及票據與結算結餘總額兩者之間的轉換構成障礙,此舉亦有違兌換
保證的目標。

8.劉慧卿議員詢問,在重組貨幣發行局制度後,金管局幾乎沒有可行使的酌情權,屆
時金管局應否維持其現有的人手架構。陳乃虎教授回應時表示,聯匯小組沒有研究金
管局的架構及職員數目;金管局除履行貨幣發行局的職能外,亦負責制訂其他貨幣政
策及監管銀行業。

9. 陳玉樹教授評論政府於8月在證券市場採取的行動時表示,雖然面對著嚴峻的市況
,有關的入市行動是無可避免,但當局過於倉卒決定入市干預,沒有全面評估此舉對
本港和國際金融市場的影響。關於如何處理在行動中購入的股票,聯匯小組建議,政
府應盡快有秩序地出售該等股票。由於政府兼具市場的規則制訂者及參與者的雙重身
份,因此會出現利益衝突的情況,如果政府早日將股票出售,便可早日避免出現此情
況。

10. 關於提高本港競爭力的措施,聯匯小組認為,在港元沒有貶值的情況下,本港必
須透過將本地物價及生產成本作出市場調整,以恢復競爭力。該小組建議透過先進的
技術以提高本地的生產力。此外,政府應繼續提高香港作為國際金融中心的地位、推
行合適的財政政策以配合聯繫匯率制度及在目前經濟不景的情況下刺激經濟增長,這
些都是十分重要。

11. 聯匯小組贊同夏佳理議員的意見,認為如果金管局及早制訂鞏固貨幣發行局制度
的措施,並採取積極的做法,向公眾人士灌輸各項有關事宜的知識,金融市場最近出
現的一些問題本應可避免發生。聯匯小組強調,加強公眾人士認識本港的貨幣發行局
制度及金管局新推出的技術性措施,是十分重要。披露更多關於貨幣的資料和加強有
關的教育工作,均會有助增強公眾人士的信心及穩定市況。

II 曾澍基教授
(立法會CB(1)461/98-99(02)號文件)

12.曾澍基教授表示支持金管局的7項措施,以及政府當局30項加強證券及期貨市場秩
序和透明度的措施。他認為,金管局推行兌換保證和貼現窗這兩大舉動,基本上與他
所建議的AEL(阿根廷、愛沙尼亞、立陶苑)模式的原則是一致,但政府於1998年4月發
表的《金融市場檢討報告》中否決了該項建議。如果當局及早制訂該7項措施,應可
加強本港抵禦炒賣港元活動和操控市場活動的能力,當局可能無需採取入市干預這具
爭議性的行動。

13.關於更改兌換保證的匯率及釐定貼現窗的基本利率等尚待商定的事項,曾教授建議
當局在500個日曆天內,逐漸將匯率由7.75改為7.80,並以美國聯邦基金目標利率作為
基準,再加上一個溢價以反映港元的風險。該溢價可透過參考本港銀行同業拆息率而
作出調整。他亦建議提供雙向的兌換保證,容許銀行按固定匯率把港元兌換為美元或
把美元兌換為港元。雙向的兌換保證會增加匯率套戥的透明度,以便維持匯率穩定,
藉此減低因拋空港元而導致利率飆升。由於拋空港元不一定會導致利率飆升,因此金
融市場出現雙邊操控的危險亦會減低。

14.至於長遠而言,本港維持聯繫匯率制度是否適當,曾教授認為,雖然有須要進一步
討論固定匯率或非固定匯率制度的利弊,但現時並不是廢除與美元掛鈎的安排的適當
時候。然而,在外圍經濟環境可能繼續惡化的情況下,或會日益令人懷疑7.80這個固
定匯率是否適當。長遠而言,如果港元在下一世紀面臨升值的壓力,屆時當局或會考
慮這問題。

15.關於當局處理在8月入市行動中所購入股票的方法,曾教授不同意外匯基金投資有
限公司由於持有該等股票或會被視為對市場具有影響力,因而應盡快出售該等股票。
雖然外匯基金投資有限公司最終應出售所有股票,但該公司應有秩序和謹慎地出售股
票,以避免對市場造成下調壓力。

16.曾教授贊同丁午壽議員的意見,認為低而穩定的利率對本港經濟復甦至為重要。他
並表示,自市況回穩後,名義利率自1998年9月持續下降。金管局的7項技術性措施會
有助減低利率波動,如果外圍經濟環境繼續保持穩定,市場氣氛會有利進一步減息。
事實上,本港的利率一直較美國聯邦利率高3%至4%,但自從推行金管局的措施後,兩
者之間的差距已縮窄至只有1%。

17.李家祥議員關注兌換保證會鼓勵銀行進行貨幣套戥,從而使銀行體系因競爭增加而
承受額外的風險,曾教授回應時解釋,在推行該項新措施後,金管局可以利用銀行業
的套戥者的助力,而不再需要單獨面對整群投機者和缺乏信心的投資者。由於銀行業
進行套戥活動,因此本港出現資金外逃時所引致的儲備流失會由政府和銀行業共同承
擔,情況不再是為了減低資金進一步流出,當局在干預外匯市場時令美元儲備直接流
失。他認為,本港的銀行體系健全及穩健,有能力共同承擔外匯儲備下降的情況。此
外,貼現窗應可為銀行提供充足的流動資金支持。

18.關於金管局承諾兌換保證為期6個月,曾教授認為,將該項保證解釋為一項保險計
劃或許不是適當的做法,因為當中並不涉及任何保費或賠償金。他承認,政府官員就
維持匯率在7.80元是否適當進行任何公開討論,將會影響市場氣氛。然而,他身為學
者,希望指出在經濟環境可能繼續惡化的情況下,市場內出現的疑慮,並非關於官方
捍衛聯繫匯率制度的意向和能力,而是針對7.80這個匯率是否適當的問題。他補充,
本港必須推行建基於明確規則的貨幣發行局制度,以及提高有關運作的透明度,從而
加強市場信心,此舉亦有助維持貨幣穩定。

III 饒餘慶教授
(立法會CB(1)461/98-99(03)號文件)

19.饒餘慶教授支持金管局為鞏固貨幣發行局制度而實施的7項措施及為加強證券和期
貨市場而實施的30項措施,亦支持政府於1998年8月的入市行動。他表示,自1998年
9月以來,股票市場轉趨穩定、市民信心增強及資產價格回穩,這些足以證明政府當
局已成功捍衛港元及維持金融體系的穩定。不過,香港的經濟基調依然疲弱。因此,
政府的工作是在不影響港元穩定的情況下,透過在財政、勞工、收入及房屋方面實施
適度的擴張性政策,刺激經濟復甦及增長。

20.關於提高香港作為國際金融中心的競爭力方面,饒教授強調,香港應改善本身的競
爭力,此種做法將會較以行政手段禁止其他金融中心進行競爭更有效。此外,香港亦
不能為着吸引更多金融業務,而降低對金融業進行審慎監管的標準和質素。他並建議
成立一個由金管局、證券及期貨事務監察委員會、專業人士及業界團體、學者及專家
代表組成的特別委員會,研究如何增強香港作為國際金融中心的地位及聲譽。

21.至於有關政府當局賦權行政長官直接向兩間交易所及結算公司發出指示,以便當公
眾利益受到威脅時,政府有能力盡快作出適當應變措施的建議,饒教授表示,該項建
議會被視為是政治性干預。他認為,如當局確有需要具有這種權力以應付危機,將權
力賦予財政司司長便已足夠。他繼而解釋,政府有需要於8 月在證券及期貨市場採取
行動,打擊嚴重的"雙重炒作"活動,否則有可能會觸發一場體系性危機。當時的情況
的嚴竣程度屬前所未見,政府必需採取緊急的特殊行動,但該等行動的目的,並不是
要將股票市場的價格維持在特定的水平。他引述海外學者支持有關行動的言論,並提
出美國當局亦曾作出類似的行動以防止可能出現的金融危機,而美國聯邦儲備局挽救
名為長期資本管理(Long Term Capital Management)的對沖基金便是一個例子。

22.關於基本利率的釐定,以及將匯率由7.75轉回7.80方面,饒教授表示,金管局及外
匯基金諮詢委員會已考慮學者提出的意見,並正擬定有關安排的細節,在適當時候便
會公布。至於發行新的外匯基金債券及票據,饒教授認為,新的外匯基金票據,必須
在資金流入的情況下才發行。

IV 宋恩榮教授
(立法會CB(1)461/98-99(04)號文件)

23.因為金融市場仍然出現波動,宋恩榮教授不同意在現時將港元與美元脫鈎。此舉會
破壞公眾人士對港元的信心,令投機性衝擊活動更加難以扺禦。由於沒有出現貨幣貶
值,香港必須藉減低成本以恢復競爭力。利率上升及通貨收縮會成為調整過程的一部
分,而為了吸引資金流入,可能需要調高利率。

24.宋教授同意金管局的7項措施基本上已糾正了香港貨幣發行局制度的流弊,但他指
出,在固定匯率的制度下,港元仍然很容易受到投機性衝擊。雖然香港是小型的開放
經濟體系,但同時亦是國際金融中心,股票買賣的交投量龐大,因而往往吸引投機者
衝擊其貨幣。他認為長遠而言,美元化及效法新加坡的模式是穩定港元的可行方法。
事實上,金管局的7項措施已向美元化邁進一步。宋教授提及新加坡的模式,並解釋
新加坡元除與一籃子貨幣掛鈎外,亦有限制規定在進行離岸金融業務時,不得使用
借入的新加坡元。此舉使投機者難以累積大量新加坡元進行沽空活動,從而令新加
坡元較能承受投機性狙擊活動造成的影。有關的限制是否適合香港,應該加以審
慎研究。另一方面,香港股票市場交投量激增,此情況自香港成為內地一個重要的
集資中心後尤甚,會令港元較容易受到狙擊。更廣泛地以美元進行股票買賣,或可
解決此問題。

25.宋教授在闡述其建議時解釋,當局在促進本港債務市場的發展時,亦應考慮採取新
加坡的做法,使投機者較難進行沽空港元的活動。另一方面,為鼓勵以美元買賣股票
,當局可挑選在國際股票市場交投活躍的股票,進行試驗計劃,作為一個開始。

26.關於金管局應否在貨幣發行局制度運作方面保留若干權力,宋教授認為,提高金管
局運作的透明度及披露有關資料,固然有助加強其問責性及投資者的信心,但維持金
管局的獨立性亦十分重要。在此方面,金管局主動披露關於銀行體系的結算結餘總額
及外匯儲備的總金額,以及關於釐定基本利率的機制的資料,均是可取的做法。

V 何炘基教授
(立法會CB(1)461/98-99(05)號文件)

27.何炘基教授發表的意見主要涉及本港金融服務業的規管機制,特別是有關機制是否
足夠並充分準備可應付日後的挑戰,包括激烈的競爭、金融業務全球化及集團化,以
及金融工具的使用日趨普遍各方面。

28.何教授要求進行獨立的調查,以檢討整個金融制度及其監管環境。劉慧卿議員詢問
如何進行此項調查,何教授在答覆時以澳洲於1996年進行的調查為例,表示該項調查
以獨立於有關監管機構的形式進行,由大約6名人士,包括業界及學術界的代表負責進
行。該項調查對整個金融制度進行了全面的檢討,所涵蓋的範圍包括檢討現行的規管
機制、研究日後的需要、邀請其他國際金融中心就可予改善的地方提供意見,以及就
有關的政策提出建議,藉此促進金融業的持續發展。何教授指出,特區政府過去就本
港金融制度進行的零散研究,以及於1998年年初進行的金融市場檢討的性質,主要是
就危機作出回應,並屬政府內部所衍生的自我完善的行動,沒有遠見可言。

29.何教授在比較本港與其他司法管轄區兩者的金融規管制度時指出,世界的趨勢是朝
着以功能為本的規管機制發展,但香港卻仍然以機構的分類為主流。在香港的規管機
制下,一項簡單的金融交易須受到多個不相關的機構所規管,導致規管方面出現更多
灰色地帶。

30.察悉到本港金融業是由政府、證券及期貨事務監察委員會及市場機構負責監管,何
俊仁議員詢問在政府架構以外,另設一個規管機制的優劣。何教授在回應時表示,根
據英國的規管制度,監管權力集中於一個名為金融服務管理局(Financial Services
Authority)的政府機構。國際證券事務監察委員會組織於1998年年初發表的諮詢文件指
出,該類型的機構能更有效地規管金融集團。然而,澳洲及加拿大兩地所實行的規管
制度,監管權力較為分散,政府及市場金融機構兩者均需履行規管的職能。另一方面
,何教授亦表示,即使設立了獨立的規管機構,當局亦需在公帑中為規管機構撥備經
費,因為穩定的撥款來源對規管機構履行其職能至為重要,並可避免由於市場參與者
既是規管機構財政支援的來源,同時亦是規管機構所規管的對象而出現的利益衝突問
題。

VI 默頓.米勒教授
(註:這節討論內容的逐字記錄本見附件。)

VII 其他事項

31.主席提醒議員,事務委員會下次例會將於1998年12月7日上午10時45分舉行,屆時
會討論監管股票按貸財務的建議,以及政府當局就市場參與者及學者對捍衛聯繫匯率
制度的機制所發表的意見而作出的回應。

32. 會議於下午12時45分結束。

立法會秘書處
1999年4月27日

Verbatim Transcription
LegCo Panel on Financial Affairs
Special meeting on Saturday, 14 November 1998, at 9.00 am in the Chamber of the Legislative Council Building
Mechanism for Defending the Linked Exchange Rate System

VI Professor Merton Miller

Hon Ambrose LAU (Chairman)

On behalf of the Panel, I would like to welcome Prof Merton Miller to attend our meeting. Prof Miller needs no introduction, everybody knows that he is a famous economist and is a Nobel Laureate in Economics. I would like to take this opportunity to congratulate him on the occasion of receiving his ninth honorary doctorate from the Hong Kong University of Science and Technology.

I am sure that everybody is very eager to hear his views, so I would like to call upon Prof Miller to give us his views, but leaving enough time for us to ask questions in the meantime.

Prof Merton Miller

Thank you very much, Mr. Chairman. I am proud and honoured to be here and especially to be considered an invited expert. We are kind of cynical of experts in the US. An expert has been defined as someone from out of town and that is certainly what I am.

To be sure to leave time, I am going to dispense with any formal remarks. People know where I stand, I think, on most of these issues. I would much rather react to your questions and try, if I can, to give my answers. So, we will start with Q & A.

劉漢銓議員(主席)

這樣大家多了很多時間發問,請大家舉手表示一下哪幾位想問問題?只得一位嗎?噢
,原來人人都想發問,或者先由李家祥議員發問。

李家祥議員

我很歡迎米勒教授來到香港,以前我也聽過米勒教授很多講話,讓我學懂了很多新知
識。我想藉這個寶貴機會請教米勒教授,我相信米勒教授也會同意,經濟理論和實踐
未必一致,主要是因為經濟參與者的行為未必全部都是理性的,他們對同一經濟狀況
可能會有不同的反應。我曾經聽過很多位教授說過,投資者有時因為對未來的預測沒
有信心,可能會作出恐慌性的買賣決定,或者引致出現羊群心態。在政府8月入市時,
可能有人認為政府對自己的金融機制信心不足,所以作出入市的行動;官員又可以說
恐怕市民對機制認識不足,會出現恐慌性的行動,所以政府才入市。究竟事實如何,
我想是很難證明的。不過,米勒教授前日提議當局現應將行動逆轉,即是政府在入市
後現在要離開市場。我想特別提問這方面的問題。

米勒教授在前日提議,應該一次過將政府手上超過千億的股票以全球性公開拍賣的形
式出售。這做法會否令部分投資者擔心或者預測股價會在很短時間內迅速下跌,這種
恐慌性拋售的危機會否存在?可否有其他方法,如分批出售,以便市場有更多時間消
化這些出售的股票,以避免一些風險?而最重要的,我很希望米勒教授可以指教一下
,現時股價上升大家當然開心,但如前述般出售股票時股價下跌的機會很大,差不多
是必然的現象,那時大家當然會不開心,對於這種情況,我們應該如何向市民解釋這
項賣股票行動呢?

Prof Merton Miller

Let me say that there are really two kinds of markets, actually more. But the two main ones are what we call the continuous markets, where a bunch of dealers standing around doing bids and offers, like the New York Stock Exchange or the Hong Kong Stock Exchange, and that is fine for dealing with small transactions of a few hundred shares at a time, and that is what it was designed to do. But there is another kind of market, where you are selling a large block, you want to sell a millions shares or a big chunk of shares, and you can't just go to the brokers, unload it and say "Get rid of it." There will be not only adverse market effects, but tremendous amount of uncertainty. When is the last shoe dropping?

So, what you do when you have a very large block to deal with is you have to use another kind of market mechanism. And that market mechanism is called the call market. The essence of it is that it is very open. You announce, "Hey, everybody, one month from today, a million of these shares are going on the auction block to the highest bidder." Actually, there are several technical ways to do that, but you announce it and everybody has a prospectus, and people from all over the world, not just Hong Kong but everywhere will say, "Gee, on December 20, there're going to be a big auction sale in Hong Kong. There're going to be bargains." Of course if everybody says there're going to be bargains, then you get a nice competitive price. The stocks will be sold essentially for what they are worth. This happens all the time. These big block sales are done. For example, the US government sells 15 billion of ten-year Notes, and it is done by an auction.

There is an interesting kind of auction called a single price auction, where everybody gets the same price. Or you can have what is called a discriminatory auction, where you just submit your bids. But in a single price auction, the one I want to recommend to you, you submit what amounts to a demand curve, ie "if the price is this, I will take so many, if it is this, I will take so many more" and so on down the list. The computer puts it all together, clears the market and everybody gets the same price. So, you can't say that this one has got an advantage over that one or anything like that. It is a fair and open system and will enable you to get out of the problem you've got there. You've got this big kitty and what are you going to do with it? It's hanging over the market. I don't say it's costless, I don't say it costs zero, but look, you've got into that mess and you have got to expect to incur some cost. You incurred some cost on the way up and now, unwinding, it is going to also incur cost, but at least you will get rid of it.

李家祥議員

我想跟進這個問題,如果分開幾次拍賣,會否把風險減低?

Prof Merton Miller

By several batches, you mean first the banks and then the utilities or what have you, or you could do it any number of ways. I favour getting it over with as quickly as possible. I don't know, you might want to talk, as you should, with investment bankers and get their opinions, but I would be careful. Remember, they are not necessarily always objective advisors. I personally favour, as long as it is open, what is called the "sunshine trade", all the cards on the table, everybody in the whole world knows what you are auctioning. The market will adjust immediately at that point and people will pay the price of it.

Incidentally, I like this idea of follow up on a question because there is so much, first there is one question and then somebody goes on to the next. So, I think everybody should be allowed two or three go's at me!

劉漢銓議員(主席)

下一位是朱幼麟議員。

Hon David CHU

It is clear that you are advocating to get rid of these shares as soon as possible, but how about the opposite? Let's say if the government decides, for whatever reasons, to hold these shares for the longer term and also define a fairly long period, let's say, that the government will not release these share within the next ten years to give people sufficient assurance that this stock is not hanging over the market. Is there anything inherently wrong with this approach?

Prof Merton Miller

I don't deal in inherent rights and wrongs. All I'm saying is, I'm warning you, that nobody automatically believes what a government says anymore. And having done it the first time, people will say, "Well, they told us before that it would never happen, and it did." And now they'll say, "We'll never get rid of these shares." "Never? Maybe they mean it now, but things change over time and bang, down it will come." That's the problem with having that kitty there. If you don't have it, you can't be threatening to drop it on the market. It will have dropped all at once and it will be over with, and you can go on about your other business.

Hon David CHU

Just a short follow-up. The reason I am concerned about an auction of this amount immediately is that after the auction, the new holders of these shares may choose to release them at whatever rate they feel. And maybe at a rate too fast for the market to sustain at this volume, and may cause unnecessary turmoil in the market.

Prof Merton Miller

Well, if they release it too fast, why did they bid in the auction in the first place if they didn't want to hold them? Anyway, if they do sell on the market, that's their problem. I can't see that happening. Once you bid in the auction, it is presumably because you want to add these to your portfolio, and that is the way it should be.

劉漢銓議員(主席)

下一位是何秀蘭議員。

何秀蘭議員

謝謝主席。多謝米勒教授替我們對"專家"下了新的定義。在香港,"專家"有時可能是
相等於迴避監察,不需向市民問責的擋箭牌。我們剛才前幾節的講者也提到香港若面
對某程度的危機,便需要考慮美元化。請問在 8月時本港是否已到了這個危機呢?如
果當時政府採取美元化的手法,是否比動用1,200億港元入市更好呢?至於我為何不談
你提出關於聯匯保險票據的建議,對不起,因為我對這建議有所保留,由於該等票據
也是以港元為基礎,當我們仍使用港元,而港元又受到衝擊時,我們卻採納票據制度
,我看不到有甚麼好的誘因,令市場接受票據。唯一有效的誘因就是高息,但高息卻
損害經濟。如果利息不高,又不能提供誘因,而且票據也有時限,譬如3年、5年,但
期限到了又如何呢?當然我們可以利用這幾年期限來恢復元氣,但這是否能幫助我們
重拾競爭力呢?希望米勒教授能在這方面再為我們解釋一下,好嗎?

Prof Merton Miller

Let me say something about the "put" option, which everybody associates with me, although the HKUST people are also heavily involved. First, the point about the puts, that's one way of putting it as it were, I call them structured notes, some people call it puts, some people call it HKMA bills. It's the same thing. So, the proposals that have been made to expand the monetary base are very similar. I was amused to hear one of the previous speakers say that it is altogether different. It is not altogether different, it is a different form, but essentially what ever you are doing with those bills, provided you set the base rate at the US rate, it is essentially a put. Modern finance is so flexible that the same thing can take different forms. So, although you don't call it a "put" and although my good friend, Joseph Yam, would never call it a "put", nevertheless it is a put! It is the same thing.

About dollarisation, the point about the put was to calm down the public about the seriousness of maintaining the peg, and also in the process to remove or substantially reduce the temptations of speculators that you are always so worried about. If they know they cannot make a lot of money, then they are going to go elsewhere. So, that was the function of it and once you do it, you don't have to worry for a moment about dollarisation. People like Joseph will say to me, "Yes, but what if it doesn't work? What if despite all these puts, everything that we do and say, they still insist on attacking the currency?" Then I say, 'then you can, there is one last ace in the hole that you can fall back on, and that is dollarisation. Attack and attack all you want and you"re not going to wind up with anything, because we can always dollarise."

When Argentina played that card a couple of years ago, all of a sudden attacks on the Argentinean peso diminished. That's a powerful weapon, but you never have to use it, you hope. It's just like a club in the closet. If necessary, you warn these people, we can play it, but you hope you don't have to.

劉漢銓議員(主席)

下一位是何俊仁議員。

Hon Albert HO

Prof Chen, who is now sitting next to you, mentioned to us this morning that you gave a very comprehensive and succinct explanation to Joseph Yam about the relationship between the interest rate and linked exchange rate. I hope I can hear it directly from you. I hope we can understand it and, hopefully, Joseph Yam did.

Prof Merton Miller

I hope I can reconstruct the epiphany that I must have had. Essentially what we were trying to do in talking with Joseph, we had a long chat. Actually we get on very well, we have somewhat different educational and professional backgrounds, and sometimes it turns out when we are discussing, he's talking about one thing and I'm talking about something else, even though the words are sometimes essentially the same words. What I was trying to do, if I remember correctly, what Prof Chen is talking about is that you have to separate out two problems, two separate roles that the interest rate plays in adjusting and equilibrating the economy. And I said, to make life simple, let's suppose that we cut away from all the very complicated details of your actual plans, we are in a simple world in which you just have currency and coins as part of the currency board arrangement. What's the point of that? It's just to get rid of these distractions so that you can focus on it. Consider a world in which everything is done with currencies and now, the Hong Kong economy suffers a depression because after all, let's face it, all over Southeast Asia, East Asia generally, including Japan, the countries are in depression. But what happens in a depression? In a depression, a normal one, interest rates would fall. Why would they fall in Hong Kong? They fall because the opportunities to invest are not very attractive, and currency would start to flow out of the country and interest rates would fall. Now, let's do it the other way around. Suppose there's a boom. Now, everybody wants to invest in Hong Kong and sure enough, interest rates will rise to attract foreign capital in. These are benign equilibrating moves of the interest rate that would occur even in a simple world.

That is not the kind of thing that happened last August, or whenever it was, when you had the interest rates shoot up several hundred percent. That is not the way, we are not talking about the economic function of interest rates now. We are talking about a special defect in your original version of the currency board that made you very vulnerable to certain kinds of speculative attacks, that you can only deal with by sharply increasing the interest rates because of the liquidity crisis. When, for example, if you run out of foreign exchange or something like that, or if you are determined, for one reason or another, to defend not just the peg but the total reserves that you have, there's only one weapon that you have left, ie to have the Monetary Authority raise the interest rates, whereas the previous moves I was talking about of interest rate, nobody raised it, the market will adjust it. But that is not the problem that you've gotten into. You ran out of space in terms of your currency board, you had no option, or at least he thought he had no option, but to defend it by raising the interest rate very high. Once you do that, though, speculators or what you call speculators, not just George Soros, a lot of people in Hong Kong are also pretty smart, they can figure out, "Look, if Joseph is going to raise the interest rates very high, we have got a couple of plays that we can put against him. First, we can sell short in the forward exchange market, and induce him to say "C'mon attack us," and raise the price. I am willing to concede at least in theory, that this double play mechanism could work. As long as you can be sure that the only weapon you have is raising the interest rates, you"re giving them a free pass in these other markets, in the forward exchange market for itself, plus the futures market, plus the stock market.

So, Joseph may not be entirely paranoid, that may have been one of the elements in it, but the cause of it was not the speculators, it was the fact that they knew you were vulnerable and had only one weapon left, namely raising interest rates. That's where our "put" scheme came from. Look, there must be another alternative that you have, and that is to use the power of modern derivatives to say "We are not going to change, we are not going to shoot those interest rates up." How can we deal then with the speculative attacks? There are two answers to that. First, we can deal with it by letting the horde of exchange reserves that we have go down somewhat, but the other thing is that we don't have to worry about it. If the speculators, or the so-called, feel that they have nothing to gain, then they won't attack it because they are in business to make money. And if they don't think they can make money by this policy, they won't do it. Let me give a little analogy on that. We have in the US, I've looked around here and I notice you don't have it, it's called 'the club". It's a metal bar that you put over the wheel of you car to discourage thieves. Have they hit Hong Kong yet? To any serious thief, this is laughable, they know how to break those things easily. So, why are people selling it? Because they reason like a thief, ie thief sees the club on the wheel and says "Well, yeah, maybe I can get it, but it's easier to go to the next car." And that's the same way with these so-called speculators, once they realise that there are large amounts of reserve that the authority is willing to bring to bear against us, they will go on to the next one, they won't bother.

劉漢銓議員(主席)

下一位是單仲偕議員。

Hon SIN Chung-kai

The attack on the Hong Kong dollar was followed by the Asian financial crisis. There are some new suggestions that Asian currencies should become a single currency. There are also suggestions that this new Asian currency should be tied up with the Japanese yen, probably because the Japanese economy will have a great impact on Asian countries. How do you react to this kind of suggestions?

Prof Merton Miller

I think that is a very good point. I am surprised I sat through all this discussion earlier and nobody even mentioned the Japanese yen. That's a key element in all of this. When talking about the Asian financial crisis, I hope I'm not the only one, but I am certainly one of the ones who pointed out that much of that traces to the Japanese. They are getting away with a pass here, people aren't criticising "What happened to this?" Their economy went into the tank, their banks were suffering and one of the things the Ministry of Finance did to help pull their banks out, there are other things they should have done and could have done, but they said "Let's lower interest rates." And boy, did they lower it! But the point about lowering interest rates was to give a term structure play to the banks, so that the banks could borrow at short term or only have to pay very low interest rates and can invest in longer term securities. They thought, "Aha, that way the banks will make more profit and they can write off some of those loans"" I don't say it was totally implausible, it was, if you look at history.

So, down they drove short term interest rates in Japan, to levels we haven't seen since the 1930s. In fact, recently there was a period for a while when it was actually negative short term interest rates in Japan. It can happen! But in any event, that is what they did, and they didn't realise, or they didn't care or maybe they did, that when you drive down interest rates, you also drive down the value of the yen. That is a way of cutting the Japanese exchange rate " the yen. These countries in Southeast Asia were at least, some of them entirely, some of them are wholly linked to the Dollar. When the yen goes down, the Dollar goes up, and all of a sudden if the yen goes way down, and your exchange rate is linked to the Dollar, it's over valued relative to the yen which is the major economy in this area, and certainly a major competitor. I always warn people in Hong Kong, "Look, if the yen is going to drop to 160 to the Dollar or something like that, forget it." You"re going to be hurt hard and not only you but everybody else in Southeast Asia. No matter what you do, policies or forums like this, there are just too big shockwaves coming across your bow. Similarly, if it goes the other way, if the yen appreciates, you will be all right, you will make it out of the crisis one way or the other. So, you have got to realise that you are part of a bigger picture and not entirely a matter of being in charge of your own fate. Don't confuse yourselves with the US here. You are a small, but very interesting, country. But you can't, if the tidal wave is coming from Japan, don't kid yourself that there is anything you can do to stand up against it.

Hon SIN Chung-kai

I am not suggesting, but because the effect from the Japanese is the greatest, is it more logical that Hong Kong is linked to the Japanese yen rather than the Dollar?

Prof Merton Miller

For other Asian countries, the answer is yes. Some of them have de facto been doing that. They won't call it that but they move a little more inclined with that. So, I would say that the countries in Southeast Asia, many of them ought to adopt "currency board"- type programmes because why do they need a central bank and that kind of money supply for? Only, they should hook on to the yen. The reason is that way the Japanese can never exploit them with their "beggar-my-neighbour" policy, which is what the Japanese are doing. They are in a big drive, some of them, some people including some American economists, they want the Japanese yen to drop so that Japan can export its way out of its troubles. If Japan does that, though, they are just exporting their way into trouble in the other countries.

This is a problem with floating exchange rates that people don't often realise. They think of them one country at a time, but it's not. We have got a whole system of exchange rates and if the Japanese yen falls, it is going to affect all the other exchange rates accordingly. So, I would say some of them ought to hook to the yen, and that raises a question. What about China and Japan? China can't hook to the yen and the yen can't hook to the yen, it is the yen. Well, I suggested that the model China and Japan are to look to is Europe, the European Monetary Union, on the grounds that Europe was plagued with these competitive devaluations for decades. The French were quite convinced that the Italians, to use a slang phrase, were eating their lunch! The Italians were continually cutting the value of the lire and taking away business from the French. They believe that firmly and they may very well be right! Finally, and if you start with them on the subject and say, "What about the French versus this?" They"d say "What about the Greeks and so on?" There was a tremendous feeling of that we are all subject to this competitive devaluation, we can't take it anymore. Hence, the pressure to form the EMU.

There were political pressures too because of the natural antagonisms that have gone on for hundreds of years, and I don't say it will be easy to do it here in East Asia by any means. But I think at least it should be considered, that you get rid of all this competitive devaluation that is going on by having a single currency for the whole area.

劉漢銓議員(主席)

下一位是劉慧卿議員。

Hon Emily LAU

Thank you, Chairman, Prof Miller has been very critical of the government's intervention in the stock market in August and said that it has tarnished Hong Kong's free market image. But of course, events subsequently silenced some people because they looked at the fact that the stock market rose and we had made a profit, at least on paper, and they talked about the Federal Reserve bail-out of Long Term Capital Management, and said that there are all these problems in other countries as well.

I would like to ask Prof Miller whether he would agree with some people who said that the end justifies the means. Would you say that with hindsight, the government's intervention was not that far wrong, and the damage done to Hong Kong is really not that significant.

Prof Merton Miller

I would like to take that one up because this view which is so common is essentially a fallacy. And it is so ancient a fallacy that it even has a Latin name. We call it the "Post hoc, ergo propter hoc" fallacy, that because something happens at first and then something else happens, then there is a causal relation there. The classic example of that is every morning the rooster crows and every morning the sun comes up. What do we conclude? The rooster crowed and the sun came up, it's as simple an example of causation as you can find. Similarly, they intervened and about half the time, the market goes up and about half the time, the market goes down. Other things are happening all over the world and so it didn't turn out in this case that that was the bottom. But that doesn't affect the matter of principle here at all.

Hong Kong used to be known as a country with an economy where the market rules, you don't have the government intervening all over the way they used to do in Singapore and other countries. And that attracted foreign investment, people were willing to deal with Hong Kong as a financial centre. You don't have to worry about the government robbing you from time to time by arbitrary actions. Well, you've compromised that now. And that is why I'm recommending that you sell (the shares), that's a way of saying "OK, we won't do that again. We"re back to the old Hong Kong you all knew and loved." It's a signal. To say that "we intervened once and it worked fine" is just telling the market that you are going to do it again.

Hon Emily LAU

A short follow up. I would like to ask Prof Miller what is his assessment of the damage that has been done. You say foreign investors are very wary now, and you think we are going to have this problem because we are not going to be able to get rid of the shares in the short to medium term.

Prof Merton Miller

Yes, you are. That's what I've been trying to tell you! It's very easy, it's the easiest thing in the world. You have an auction and you get rid of it, we do it all the time in the US. I don't know why you can't do it here. Large block trades. That's easy. Don't kid yourself" that's another one of the problems with that policy. You've got this tie and now you can't seem to let go off it. You can if you are really serious in wanting to get rid of it, we can get rid of it for you. Nobody will be disadvantaged, nobody is going to pocket huge sums because of this. All the cards are on the table, there's a public auction and nobody gets any special benefits from that, everybody benefits.

Let me follow up myself on another thing. I am more and more sick and tired of hearing about Long Term Capital Management as a justification for what you did. It isn't. The two cases are entirely distinguishable. I'll use an analogy I got from Prof Chen, in one case the government was acting as a minor traffic cop, the reason of which I will explain in a minute, and in another case the referee was participating in the action. The story I always tell is about a fighter who's being pounded away and he says to his handler at the end of the round, "Boy, I'm suffering." And the handler says, "No, relax, he's not laying a glove on you." And the fellow says, "Well, keep an eye on the referee because somebody is sure beating the hell out of me." And that's the problem, when you have the referee get into the market, it's one thing. All the Federal Reserve did, in the first place, there was not a single dollar of taxpayer money involved, but you had (US)$15 billion that you gambled. OK, you flip the coin and the coin has a head and a tail and about half the time heads will come up and half the time tails. So, you flip the coin and you've got, no thanks of your own, but to developments elsewhere in the world, you've got a favourable outcome. But you did intervene. The Fed did not. Let's be careful about the LTCM, not only was there no money involved, but under US bankruptcy law, we have two kinds of things that can happen to a firm in bankruptcy. One is called "Chapter 11", in which you preserve the assets of the firm, and you get rid of the equity owners, of course. But you preserve the assets because you say "Look this firm is worth more alive than dead." The other is called "Chapter 7", which is liquidation, ie this firm is beyond saving no matter what you can do.

Chapter 11 is a way of saying the existing owners are out. So, in LTCM, everybody says 'the Fed bailed out LTCM." No they didn't. The people who were investors in LTCM lost all their money. Well, 90%, because in Chapter 11 you usually leave a little bit of equity to the original debtors because you want them to have an incentive to help you in the reorganisation. But a reorganisation that was definitely not the same kind of intervention that you had. What did the Fed do? It did even less than it did after the 1987 crash when Alan Greenspan got up and said, 'the Fed stands ready as it always does to prevent the markets from seizing up. We will provide whatever loans that are necessary to the banking and brokerage community." Now, they never said anything in this case. All they said was there is a portfolio here and everybody is trying to get a piece of it. It would be better if you did a reorganisation and went about it systematically. No more bail-out than that and I don't see that as a bail-out.

劉漢銓議員(主席)

下一位是李家祥議員。

李家祥議員

多謝主席。外來的專家肯定會帶給我們更宏觀的國際視野,我想就這方面的事項發問
。現時很多先進國家都意識到國際市場秩序的重要性,而需要更加了解這些對沖基金
的性質,有些國家的反應是在行動上作出一些規範,這樣做是有違自由經濟市場的原
則,我對這點是有保留的。但對這些對沖基金在不同地域的雙邊或多邊操控活動,在
提高市場的透明度,讓人清楚其活動方面,請問在原則上,米勒教授認為應否反對呢
?如果實行起來會有甚麼困難呢?在與日圓掛鈎方面,我也想作出跟進,我們與美元
掛鈎,基本上是相信美國的透明度高,監管相對完善,政治上亦願意負上國際責任,
但在日本方面,它的監管標準似乎與西方國家的很不相同,它甚至不肯撇除銀行壞帳
,而且受政治的影響很深,同時它整個制度是傾向保護自己本地經濟,根本不存在國
際責任的心態。如果他們是採取這種方式,而我們是根據這樣的制度的話,是否與本
地的需要出現很大的差異呢?

Prof Merton Miller

There are two parts to that. First you mentioned hedge funds. They are very much in the news these days. What are the hedge funds? There are dozens of different kinds. A simple definition, if you want one, it is the way rich people invest their money. There is nothing special about them. I would say that if I had $20 million, I probably would have invested in LTCM too, because I know the people involved. I just don't have $20 million! But that is the point. There"re hundreds of different kinds of them. When you hear the call for regulation of hedge funds, you say "What are they talking about? If there are so many different kinds, who would regulate them? What is it?" It is just usually the regulators are very defensive about them. There was a big splash in the papers, it wasn't very well understood. But people will say to the regulators and Congress, "LTCM went belly up, where were you, what were you doing? You"re supposed to be a regulator." And they say, "Yes, I guess you"re right, we'll have to do something." But what it is, is by no means clear. There is no regulatory body that can take charge of this mass of 400 different kinds of organisations. Some are like mutual funds, some are not.

On the other hand, they'll say, "Look at all the leverage they have." Who gave them the leverage? Some of them the banks did. Why did they do it? The banks are among the most heavily regulated segments of society. That's defensive talk by the regulators. And, they will always react in crises, that's the way they do, and they may even make some changes. That, again, is the way regulators are, they will react to the last crisis. There is nothing in their mechanism that allows them to think of the next crisis because we don't know what that is going to be. So, they don't react to the crisis to come but to the one we just had. I also say that we are lucky that that is the case. Can you imagine what the rulebooks would be like if the regulators were reacting to crises that haven't happened yet, but that might, that they imagine might happen.

As for disclosure, let me make another point about LTCM. You must understand that disclosure sounds like a great word and in some contexts it makes sense, but if you've got a portfolio of debts long and short, I can tell you what will happen. You've heard about Warren Buffett who made an offer for the portfolio, but it was what we would call a low-ball offer. It was $250 million for a portfolio which is probably worth $3-4 billion. That is why he's the richest man in the world, he doesn't overbid for things. He made this up, the natural response of people involved is let's have some competition here. That is why I recommend the auction, get competitive. So, they called some other people and they say, "We've been offered $250 million, what will you offer for it?" They say, "Well, we've got to see what you've got in there." And so you show them what you have in there and they say, "We"re not interested." Of course, they go out the back door and they start selling short against you. So, by tipping off your hand as to what is in your portfolio, you just encourage the market to take the position against you. So, disclosure of these positions is not so obvious and automatic and is not a solution to any problem. If you say "you must disclose you positions", investors will move to regulatory areas where they don't have to disclose them.

Did I not mention whether Japan is responsible enough for people to tie their currency to. No. I think for the smaller countries in East Asia, yes. But it's not a question of responsibility, in fact, it is Japan's irresponsibility that leads to that. You don't want them to keep exploiting you with a falling yen. So, Malaysia, Indonesia, countries like that and above all, Korea, which is a competitor of Japan, may very well tie their currency to the yen. For Hong Kong, no, I don't think the urgency of that is at all clear.

劉漢銓議員(主席)

下一位是丁午壽議員。

Hon Kenneth TING

I think everybody is really worried that we are in the market, I am not commenting on whether we are right or wrong, but everybody is really concerned about getting rid of the shares. And some people are really concerned that if we go out, definitely, we are going to lose. But according to your analysis, by having an auction it can be good and, it can be bad, it is not absolute.

Prof Merton Miller

I am not urging you to speculate for profit in the market. In fact, I'm urging you not to do it, because if everybody understands that one of the players against us in the market is the Hong Kong government itself, which has a huge kitty and is standing ready to exploit us at any moment, they are just not going to go in. So, I am urging you to sell the stocks not to make a profit but to get out and to say to the public, "Look, hands free, we"re neutral in this."

Another thing you have to keep in mind, by having such a big ownership of a lot of individual stocks, they are not just faceless numbers, they are banks, property companies and so on, you are distorting the relative prices of those investments and I don't know if you want to do that.

Hon Kenneth TING

The only question is that everybody's fear is that once we get out, or the way we get out, we are definitely going to lose money.

Prof Merton Miller

Well, that's the fault of going in. You lost money on the way up, you"re going to lose money on the way down. That's an inevitable result of a bad policy. You happen to be lucky that at the moment events in the world have been such that, I hope you don't think that Hong Kong has done it" That's again my story of the rooster and the sun" Hong Kong has benefited from the general calming down of world markets, which buying the shares had really nothing much to do with it.

劉漢銓議員(主席)

下一位是吳靄儀議員。

Hon Margaret NG

Prof Miller, you haven't scaled the heights of our ambition. We are not trying to get rid of these shares. We thought it is jolly good that we are putting some of the exchange fund to much more cost effective use, we think that since we are facing a deficit budget, we might actually make use of this large block of shares to get us some money. Don't you think that this is a brilliant plan?

Prof Merton Miller

No, I clearly don't. If I have left the opposite impression, I've done something wrong. I think it's a mistake. In the first place, you must understand about investments, ie you get what you pay for. It's what we call a risk return trade-off. You can make more money at any time by taking more risks, but why are you taking risks? You've probably got too much in that foreign exchange portfolio anyway, and we are kind of advocating that you let it run down a little bit to take some of the pressure off your interest rate. But the idea that you would use your ability to buy stocks, to pick stocks to earn money for the government, I don't know" You have more confidence in the stock picker's abilities than I do. You will end up, one of these days, losing it all. It pretty much happens that way, I'm afraid.

劉漢銓議員(主席)

下一位是涂謹申議員。

涂謹申議員

我想問教授,似乎剛才教授所表達的意見是,你覺得美元化對香港來說其實是一個最
後的手段。我想問兩個問題。第一,如果要實行美元化,即使把它當作是最後手段,
請問在實行時對香港有甚麼"downside",即壞處呢?第二,美元化會否未必是最後手
段,而是必須朝的方向呢?這裏我有兩個假設:第一是長遠來說,中國與香港的經濟
會更加緊密結合,香港會更依靠中國的經濟增長;第二是我們十分依靠外來的資金,
如果一如剛才有些教授所說,假如將來香港的經濟發展,例如因為在股票市場有更多
國企公司來港上市,令港元的數額更大時,港元可能受衝擊的機會便更大。因此,這
最後的手段會否是必須朝的方向,或者是長遠要考慮的方向,而不是被迫要採取的最
後手段呢?

Prof Merton Miller

Let me point out something that is often overlooked, about a currency board. A currency board is dollarisation of one kind. Let me give an example. I was just in Poland and when I was there I decided to talk about Russia because when you"re in a country you don't like to talk about its own problems but about somebody else's, which is usually even worse. I said, one of the Chicago newspapers heard that the ruble was collapsing in Russia and said, "How can people live when the currency is collapsing?" So they sent this team of reporters over there and found to their astonishment that life was going on as usual. There were crowds and queues in McDonalds, there were all sorts of activities going on. The answer is very simple, currency serves several functions; it's a unit of account, it's a medium of exchange and above all, to store value. What had happened in Russia was that the dollar was the store of value, if you are a Russian and you had some money, you quickly put it into dollars because you knew you weren't going to get robbed by inflation that way. Suppose you needed a cab fare or make local purchases, you might take a $20 bill and break it up into rubles. What we do in the US is you take a $20 bill and you break it up into four fives when you go shopping. So, they were breaking up the $20 into local rubles. So, they are effectively dollarising, but what is a currency board? It is a way, and why I recommend it for Russia, because it is a way you can recognise the dollarisation and still save face, ie there will still be a ruble because you hooked it to, and there's a ratio, as you know, of 7, 7.5 or 7.8 or whatever the ratio is, you hook the two currencies together so that although the dollar is the effective currency, it will look for reasons... the double eagle and so on" it will look for reasons of face as if there is such a thing as a ruble.

And the beauty of the currency board is that you don't give up too much of the 'seigniorage" because you"re earning interest on your reserves. In dollarisation you give it up, there may be some other advantages but basically, dollarisation gives up the 'seigniorage" whereas the currency board does not. What happens though is that if the attacks on the currency board get so strong that you"re losing all your reserves anyway, rather than going through this interest rate policy and push the whole economy into the tank, you say, "Look, forget it, you want dollarisation, we'll give you dollarisation." And that will stop it. Then you have the US interest rate because you have the US currency.

劉漢銓議員(主席)

最後一位提問的是何秀蘭議員。

何秀蘭議員

謝謝主席。其實這是我剛才第一個問題的跟進問題。米勒教授提到由金管局制定一個
"base rate"貼現窗的利率,譬如按照美國聯邦儲備局的利率,在中間加一個很少的百分
比,譬如是50點子,使兩地的利率相差較少。但我有一點想提出,就是政府當然可以
在制定貼現窗的利率的過程中控制利率,把它降低,但香港有一個組織稱為"銀行公
會",他們可以聯手制定利率,因此,就算是由政府來制定一個低貼現率,又有沒有
方法可以阻止這個由銀行聯合組成的公會,利用市場信心崩潰的時機,扯高利息,
對香港經濟造成損害呢?

Prof Merton Miller

You have got to separate these problems, if you've got a cartel arrangement on interest rates, you ought to break it, but it is quite apart from the attacks on your currency. I would recommend, and I always get stoned by the locals when I do this, is let the foreign banks in. Let them accept local deposits and let them do whatever they want. Then all this hullabaloo goes up and say, "We are not going to let foreigners into our market." Frankly, the US in some ways is just as bad as everybody is. But the more international banking you get in the area, the freer the system is in that respect, the less you have to worry about these interest rate cartels.

As for the base rate being the Fed rate plus a little bit, the point is the Fed rate is so that this conversion principle will work and the interest arbitrage can work, and that is what you want to happen. The idea that you use the Hong Kong rate as the base rate is just to defeat the whole point of it.

Hon Ambrose LAU (Chairman)

On behalf of the panel, I would like to thank Prof Miller for his precious time in giving us his valuable views, and his interesting parables. I understand that you will be going to the Mainland shortly and we wish you a pleasant trip.