The International Monetary Fund says Hong Kong's financial system is resilient, sound and overseen by a comprehensive supervisory framework.

Financial Secretary Antony Leung welcomed the IMF's comprehensive and positive assessment. He said it is a "recognition of the efforts made by the Government and the regulators in recent years".

"As an international financial centre, Hong Kong will continue the efforts to strengthen and upgrade the financial infrastructure and regulatory framework."

Where appropriate, he added, the Government has taken steps to respond to the IMF's suggestions for further improving Hong Kong's financial framework.

They include improving the transparency of the financial stability policy framework by publishing the terms of reference of the Council of Financial Regulators and the Financial Stability Committee.

The Government published an official document to delineate clearly the roles and responsibilities of the Financial Secretary and the Secretary for Financial Services & the Treasury in relation to the management of financial affairs and public finance.

The Financial Secretary has also exchanged letters with the Monetary Authority to delineate more clearly their roles and functions in monetary and financial affairs.

In its Financial System Stability Assessment, based on a Financial Sector Assessment Programme review of Hong Kong's financial system conducted in the second half of 2002, the IMF concludes that it "is robust and fundamentally sound".

Hong Kong adheres to international standards

In particular, the IMF considers that:

* Hong Kong's financial system is resilient, sound and overseen by a comprehensive supervisory framework, and has shown strong resilience both in the face of external shocks and during the cyclical downturn;

* the financial markets are well developed, liquid and efficient, providing a wide range of products and services;

* the market infrastructure comprises the necessary components to support the efficient functioning of the financial markets; and

* the supervisory system is well developed by international standards, characterised by transparent regulations, a strong reliance on the rule of the law and free and competitive markets.

The IMF also notes that Hong Kong's adherence to international financial sector standards and codes is strong, mostly reflecting the city's role as an important international financial centre, even though further improvements in certain areas would be desirable.

Hong Kong also has a comprehensive legal and supervisory framework for anti-money laundering and combating the financing of terrorism, it said.