Blog

Public Safety

In the past few days, our society has been facing escalating violence and illegal acts. A group of radical rioters vandalized retails outlets, bank branches and public utilities. Although the Interim Injunction Order granted by the Court to restrain persons from obstructing or interfering with the proper use and operation of the railway network is still in force, rioters vandalised and set fires at MTR stations and trains. These illegal acts have no regard to the laws of Hong Kong. The rioters even hurled petrol bombs at Police officers and committed arson at various locations, posing danger to nearby pedestrians and residents. All these serious and even organised criminal offences seriously jeopardized personal and public safety.

Anger and discontent have become the excuses for the attacks. Violence and destruction have become the means to vent. These violent acts destroyed the freedom and safety that we cherish and disturbed the peace of society. Many shops were temporarily closed as they worry about attacks by rioters, and citizen dared not to go outside. Against this background and after careful consideration, the Government has decided to introduce the Prohibition on Face Covering Regulation. It is obvious that almost all rioters participating in violent or illegal acts are covered up by masks to hide their identities with a view to escaping from responsibilities. Prohibition on face covering aims to deter protesters from taking part in violent and illegal acts, and facilitate Police investigation.

Following a torture of almost 4 months, despite the different demands and comments among the society, stopping violence and serious criminal offences like arson is the common census. If we continue to tolerate violence and illegal acts, the majority of us will be bullied and oppressed in the swirl of violence.

The sole objective of implementing the Prohibition on Face Covering Regulation is to uncover the radical protesters, maintain public safety and restore public order, and protect the safety and property of individuals. Only by stopping violence and the illegal acts, citizens and the entire society can have a breathing space, businesses and shops can operate without threats, and the society can restore the freedom that we have always enjoyed, including the freedom of travel and living.

I noticed the concerns about whether the Government will invoke the power under the Emergency Regulations Ordinance to restrict flow of capital. I would like to reiterate that capital control will never happen in Hong Kong. Hong Kong Dollars are freely convertible and the flow of capital is free, as enshrined in the Basic Law. According to Article 112 of the Basic Law, "No foreign exchange control policies shall be applied in the Hong Kong Special Administrative Region. The Hong Kong dollar shall be freely convertible. Markets for foreign exchange, gold, securities, futures and the like shall continue."

Besides assuring the freedom of capital flow, we also make use of the Linked Exchange Rate System (LERS) to stabilise the Hong Kong dollar exchange rate of HK$7.75 - $7.85 to one US dollar. This mechanism has been operating effectively for 36 years and allowing corporates and investors to conduct businesses and allocate funds in a stable financial environment. Moreover, Hong Kong has substantial fiscal reserves. Our foreign currency reserve assets stand at about US$430 billion at present, representing two times of the monetary base of HK Dollar. The Government has a robust fiscal position. As at the end of July this year, the fiscal reserves of the Government stand at HK$1140 billion, equivalent to 23 months of government expenditure or 38.3% of GDP. This is a solid and strong support to HK Dollars.

The implementation of LERS met numerous financial cycles. Even facing with a large amount of capital flows in and out, the mechanism has been operating orderly. The banking system of Hong Kong is very robust and healthy. The average capital adequacy ratio of local banks in Hong Kong is 20% and their liquidity coverage ratio reaches 150%, with low bad debt ratio of 0.56%. Since early this year, a slight rise of deposits has been recorded, and no abnormalities has been reported in the past few months. These reflect that, even Hong Kong has been facing difficulties in the past few months, Hong Kong's banking system has proved to be robust and the operation of financial market remains smooth. We are determined, capable and resourceful to maintain the stability of Hong Kong Dollars and the financial market. As regards online rumours and unfounded information spreading around, we will provide timely clarifications. I appeal to you all to stay vigilant and check the facts carefully.

Indeed, we have set up a coordinated mechanism to conduct comprehensive monitoring of the operation of the markets, including short-selling and derivative transactions in the stock market and the foreign exchange market, so as to ensure the stability of the financial market. I also chair the Council of Financial Regulators, with members from Hong Kong Monetary Authority, Securities and Futures Commission, Insurance Authority, Mandatory Provident Fund Schemes Authority and Financial Services and the Treasury Bureau, to facilitate the effective cooperation and coordination among regulators in regulating and monitoring the financial markets, and to minimise duplication or gaps in the regulation. The Government will continue to maintain a high degree of vigilance and stay alert at all times to enhance and ensure financial security.

The lately released figures on retail sales show a year-on-year decrease of 23.0%, which is the biggest ever drop in a single month. This reflects clearly that the social incidents in the recent months have been hitting the retail sector hard. I hope that while we support the freedom of expression, we should as well say no to violence, so that a safe, free, and fearless atmosphere can be created for us to find a way out for Hong Kong.

6 October, 2019