Opinion | Do we get our money’s worth from the HKMA? It would seem not
- The body has never faced public scrutiny, but its silence on recent fraud scams involving gold raise questions about its purpose
There is a question we have never asked ourselves: are we getting our money’s worth from the Hong Kong Monetary Authority (HKMA)? Prompted by the release of two seemingly unrelated reports – the HKMA’s 2018 annual report and the latest crime rates – the question can only be answered in the negative.
Unlike other government agencies, HKMA has never come under scrutiny. This is because it is a body that is removed from the public, not being involved in the delivery of frontline services. Who among us cares about regulating the loans-to-deposits ratio of banks?
The agency is part of the government yet independent of it. It decides how much to pay its employees who can earn up to 19.7 per cent of their basic pay as a performance bonus. The average monthly pay at the HKMA exceeds HK$95,000 (US$12,100). Its chief earns more than six times what the chairman of the US Federal Reserve makes, a man to whom one of the agency’s key functions – maintaining currency stability – has been outsourced by pegging our dollar to the US one. The Fed sets interest rates, and the HKMA simply follows.
At the same time, the lack of public scrutiny has meant longevity of service for the HKMA’s leaders, with Joseph Yam Chi-kwong staying on for 18 years while his successor, Norman Chan Tak-lam, has been in the job for 10, and is now up for reappointment. Barring the apocalyptic, another five-year term is his for the taking.
This is the cushiest job in the luckiest of agencies: high pay with no sweat and no life-or-death decisions. It’s time to put the HKMA under the microscope. First, all its four key policy objectives – namely maintaining currency stability; promoting the stability and integrity of the financial system, including the banking system; maintaining Hong Kong’s status as an international financial centre, and managing the Exchange Fund – could be easily absorbed by the Financial Services and the Treasury Bureau.
Maintaining currency stability is on autopilot, given the dollar peg. As for managing the Exchange Fund, its latest performance isn’t exactly pretty. In 2018, its investment returns fell 94.7 per cent from the previous year, with losses of HK$59 billion in equities alone. In other words, it did poorer than an amateur investor. Were it not for its preset spreading of investment risk, it would have spilled much more red ink.
