We take the view that, amidst all the challenges and issues it has to address, there still exists considerable potential for Hong Kong to keep developing as an international financial center and a global capital market and it would be upto it and the rest of the world to determine how far the city can go further along this path.

Our previous papers have pointed out that the modern day international financial architecture first started to develop in Amsterdam in the 17^th century and so far the world has seen only 3 genuinely well-established international financial centres – Amsterdam, London, New York. Hong Kong can be seen as one which is on its way to join this league and it is arguable that Hong Kong is so far the city that has gone the furthest along this path – Tokyo, Paris, Toronto, Sydney are arguably only major national financial centres and it is quite a big leap from national financial centres to international financial centres.

Hong Kong’s dramatic transformation into an international financial center has been propelled by the growing economic and financial importance of China in the modern world which probably constitutes both its strength and potential inadequacy. We would think that a genuine international financial center would need to not only serve China well. For its continued development to be balanced, healthy and sustainable, it needs to be able to also serve well the rest of the world. And the rest of the world should mean not only the G7 countries but also the rest 180 plus countries in the rest of the world.

Moreover, we would think that a strong and promising new international financial center should also be able to play a pivotal role in the potential creation of a more balanced and robust international financial architecture which can serve well the modern financial and economic needs of all the cities and countries in the world, irrespective of their races, religions, locations and all other attributes and the existing stage of development of their economic and financial architecture.

We see the global capital market as consisted of three main components: individuals, private companies; as well as governments and non-commercial entities and these three are both seekers of capital and providers of capital. We would think that one yardstick to judge the quality and merits of the current global capital market is how well the needs of these 3 entities are being served. We do not think the current system is perfect in that the genuine needs of these there components are being genuinely well taking care of. Indeed, we see many pockets for improvements and we do think the potential concerns of “casino capitalism” highlighted by John M. Keynes almost 100 years ago is valid, sound and poignant.

We think the world can be divided into three major time zones, and with each time zone being served well by an international financial center in that time zone and that there exists an expanding network of financial centres with the international financial centres connecting with the national, regional and local financial centres to serve well the capital market as well as economic and financial needs of the individuals, private companies; as well as governments and non-commercial entities in the over 190 countries in these 3 time zones. We do see the potential of a constructive and important role for Hong Kong in the above network of international financial and capital markets in the world which we expect to see developing over the coming decades.