Financial Secretary Paul Chan said on Tuesday that cross-border financial collaboration is very important and governments and central banks should work together to ensure the stability and resilience of the global financial system.
Chan delivered a speech on the second day of the HKMA-BIS High-Level Conference in Admiralty, which was discussing the challenges faced by central banks and policymakers, such as inflation pressures and the current interest rate environment.
Chan said deglobalisation, decoupling and de-risking have hindered economic growth, limited global market access, disrupted existing supply chains and impeded the flow of goods, services, and capital. He added that economic divisions could potentially increase tensions and conflicts among regions.
"Fortunately, a full-blown decoupling now seems less likely to happen, given the temporary easing in geopolitical tensions and the highly interconnected nature of the global economy and financial system. Also, not all countries are moving down this competitive path either," he said.
"Many economies, such as those in the Middle East and Europe, are diversifying their investments and strengthening their connections with economies in Asia. In recent years, Hong Kong has played an active role in fostering such collaboration across regions. We are now seeing some enlightening outcomes."
Delivering the second speech, Agustin Carstens, the general manager of the Bank for International Settlements (BIS), said the institution has stepped up innovation efforts by capitalising on the vibrant fintech ecosystem in the region. He added that "riding the tides" of innovation will help build a more inclusive and resilient economy.
"Financial innovation and new technologies are changing both the landscape and the possibilities for central banking. Asia has been on the front line on much digital innovation in the past decade, including the development of digital identification and payment platforms that have brought hundreds of millions of individuals into the formal financial system in China and India," he said.