Hong Kong must ensure its regulatory and accounting standards keep up with international levels, Monetary Authority Chief Executive Joseph Yam says, adding he has explored many ways to make implementation of new standards easier and more cost-effective.

In his latest Viewpoint column published today on the authority's website, Mr Yam said there have been a lot of new standards affecting the financial sector. Putting them together efficiently and effectively is a challenge for regulators.

"Theoretically we could choose not to implement certain new standards, or at least spread their implementation over a longer period. However, this might be damaging to Hong Kong's position as an international financial centre."

Hong Kong should not opt out of implementing the new international standards, he said. To make implementation easier and more cost-effective, the authority has put a lot of effort into consultation.

Consultation essential

"We have been listening to what the industry has to say about the timetable they want, the approaches they want, and the guidance they need from us," Mr Yam said.

"Secondly, we have been very flexible in many aspects of the implementation: we have allowed an extended transition period for those planning to use the more advanced approaches; and have devised a simplified approach for the smaller institutions that do not wish, or do not need, to adopt the advanced approaches.

"Thirdly, we have been trying to harmonise our requirements with those of other regulators to make sure that banks operating in multiple jurisdictions will not have to face inconsistent regulatory requirements."

Mr Yam said effective implementation of new standards requires standard-setters to involve those affected in determining how and when the standards should be implemented.

A practical and pragmatic approach should be used, with appropriate consideration given to jurisdiction-specific factors, he said, adding it is important to make the new standards consistent with the requirements of other regulators.

Analysis should be done to ensure that the implementation of new standards is cost-effective and the additional administrative burden on institutions arising from adopting the new requirements should be carefully taken into account.

"We will be applying these general principles when considering any new regulatory initiatives in Hong Kong, in order to achieve a balance between costs and benefits. I hope these principles are also applied internationally by all standard-setters and regulators."