The Monetary Authority may if necessary consider further measures to enhance Hong Kong's ability to cope with turbulent liquidity conditions.

This was the message from the authority's Chief Executive Joseph Yam in his weekly Viewpoint column today, adding using public money to restore confidence in the financial system, although controversial, is sometimes necessary.

He said the local money market has been orderly despite heightened concerns about credit risk in the interbank market. However, the authority is ready to provide liquidity to the banking system as needed and there is a well-established and transparent framework for doing so.

Mr Yam said the US had no choice but to bail out banks as the alternative of letting the markets take care of the problems might lead to a financial meltdown that would throw the economy into a tailspin, which would be a lot more costly to the community as a whole.

He said it takes time, and possibly severe pain, for stakeholders in a free-market economy to realise and accept the inevitability of market intervention in special circumstances and the use of public money to rescue the financial system.

"To contain or end a financial crisis there is a need for the authorities to provide liquidity to the financial system and facilitate the re-capitalisation of financial institutions," Mr Yam said, adding the provision of liquidity is obviously the role of the central banks, since they are lenders of last resort.

He hoped the US Congress can reach a consensus on the comprehensive measures proposed by the US government to repair the balance sheet of the financial system soon.