Joseph Yam: Putting authority into the HKMA

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By:
Chris Wright
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As part of Euromoney's 50th anniversary coverage, we profile some of the biggest names that we interviewed for our May Asia focus.

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Euromoney is concerned we won’t recognize Joseph Yam after 15 years. We needn’t have worried. Emerging from a lift at the Conrad in Hong Kong, his resplendent white mop-top is visible across a crowded hotel lobby. 

“I have had this haircut,” he says, “since 1965.”

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Yam was the first chief executive of the Hong Kong Monetary Authority (HKMA) and it is hard to imagine a tenure that could have involved more. It included the British handover of Hong Kong, the Asian financial crisis and the global financial crisis, all against the backdrop of a steadily opening China.

He will always be best known for his response to the Asian crisis, but his early time, after taking the top job at the HKMA’s formation in 1993, was crucial. One issue was the looming handover. Both the British and the Chinese had recognized the risk of financial instability around it and were willing to talk, with Yam in the middle. 

“It made sense to talk about it frankly,” he says. “There was a dialogue and it went on on a confidential basis all the time. I had no hesitation to pick up the phone and call Zhou Xiaochuan [deputy governor of the People’s Bank of China in the 1990s and later chairman]. He became a personal friend.

“But at the same time ‘One country, two systems’ was very firmly adhered to.” 

Before 1997, if Hong Kong wanted to do anything in its banking system, it had to seek approval from Whitehall. They would receive telegrams in the morning requiring a reply before the Brits woke up, mid-afternoon in Hong Kong. 

“There were these yellow and blue telegrams flying around on a daily basis,” says Yam. “Then on July 1, 1997, those telegrams disappeared and the phone did not ring. It was quite a difference.”

'Most important thing'

At the same time Yam was trying to turn the HKMA into a proper central bank. 

“In central banking, the most important thing is to be in a position effectively to control the price or supply of money,” he says. “We didn’t have that authority at all.” 

He spent years taking over the role of clearing bank – performed then by HongkongBank – a mission that took from 1988 to 1996, by which time all banks cleared through the HKMA. 

Achieving that required keeping the Bank of England, the UK Treasury, the PBoC and HSBC itself onside. 

“I give them a lot of respect for that,” he says. “Willy Purves [then chairman of HongkongBank] said: ‘What is good for Hong Kong must be good for the HongkongBank. Let’s do it.’”

Yam claims to be out of touch but is nothing of the sort, with informed views on fintech, cryptocurrency, China and everything else. Having seen such crises, he has not emerged with a great deal of faith in the moral standards of banking. 

“It remains problematic,” he says. “We really need a cultural revolution in finance to sort out all these problems, but unfortunately now the sentiment in Wall Street plus Donald Trump is to roll back regulation.”