梁 定 邦 主 席 於 " 第 十 屆 會 計 學 術 會 議 " 發 表 的 演 辭

現 隨 本 新 聞 稿 附 上 證 券 及 期 貨 事 務 監 察 委 員 會 主 席 梁 定 邦 先 生 於 今 天 在 香 港 會 計 師 公 會 舉 辦 的 " 第 十 屆 會 計 學 術 會 議 " 發 表 的 演 辭 。

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As we gaze at the dawning of a new millennium, it is only natural that we should look at ourselves and try to fathom what has made us into what we are today, and what are the foundations upon which we can build our future. As a specie, we guide ourselves on being able to acknowledge our existence by thinking. Cogito Ergo Sum (I think, therefore I am) as Descartes, mathematician and philosopher, had put it. We affirm our identity by applying our faculty to think, and thereby, evolve. Yet in a millennium which has been punctuated by war, famine, sickness, and intolerance, there have been only a few junctures in history that the human race had actually evolved into a distinctly new stage of civilisation. I would venture to suggest that we may well have come to one such juncture, at any rate we may well have come to one, as far as the financial markets are concerned. To demonstrate my thesis, let me take you to the beginning of the present Millennium.

As the present Millennium began, Islam, some four hundred years after the death of the Prophet Mohammed, was in full flower encompassing in its wake, the civilisations and philosophies of the ancient Greek and Egyptian world in great centres of learning spread over a wide area comprised of what is now known as the Middle East. The Islamic civilisation in time spread far and wide, to Southern Europe particularly in Spain, to India and to China. The Sung Dynasty was also at its peak in the Middle Kingdom, at the beginning of the Millennium. The civilisation of the Middle Kingdom had by then spread to the shores of Japan, the Korean peninsula and the lands now known as Indo-China. These ancient civilisations regarded learning as an end in itself. Utilitarian thoughts were furthest from the minds of the many brilliant scholars produced by these civilisations. Perhaps that accounts for the gradual ascendancy of Western civilisation as we know it today. That too began near the beginning of this Millennium.

Sometime in the 11th century, a cultural treasure of the old World was rediscovered. That was the first step that the Western World took in walking out of the Dark Ages. That treasure was the Roman Civil Law. At that juncture in human history, there began a realization that society may be poised to enter a new era of renewal and a new stage of civilization. There was widespread hope that there would be lasting peace. The rediscovery of Roman Law and its popularization by the early teachers in 11^th Century Bologna gave the intelligentsia of Europe just the very civilizing influence they were looking for. So, the rediscovery spread to further study and the development of new ways of looking at law in other great centers of learning, such as Oxford, and to widespread reception and application of legal principles in the courts of the kings and princes of Europe and the British Isles. The movement brought new meaning to the concept of the Pax Romana not as the enforced peace of a conquering nation but as the pervading influence of a civilizing system of ideas.

As Europe left the Dark Ages behind and entered into the era that we now know of as the Renaissance, the age of rationalism began. In rationalism lay the belief that there is nothing that reason cannot conquer. This belief sat well with the logic of the legal foundations that by then had been firmly built upon the Roman Civil Law. That belief also provided the foundations for the outpouring of scientific, political and commercial ideas, the legacies of which, we continue to enjoy today. So did the ideas of Newton and Bacon began from this era. The concepts of modern democracy as a system of checks and balances. The concepts of insurance, banking and collective investment through tradeable legal instruments also came from this rationalist tradition, as did the invention of modern, double entry accounting by Luca Picioli, a Friar of the Franciscan Order in 15^th Century Italy, which enabled the blossoming international commerce of the Italian city states to grow even more spectacularly by making it possible for merchants and bankers to speak a common language. That we continue to enjoy the fruits of these ideas and inventions is the result of their universal acceptance and application, and the universal acclaim of the rationalist tradition.

Rationalism has not, however, prevented the wars, famine, and sickness. The darker side of the human mind has constantly served to obscure the civilising influence of reason. But history marches on and from time to time, provides a conjunction of circumstances which may propel civilisation to a new era.

As we stand at the threshold of the twenty-first century, it would be difficult to ignore the signs of historical opportunity. For the first time in our century, the shadows of war do not loom large in the horizons of the world. For the first time, the prospect of lasting world peace is palpable. As lawyers and accountants, we can pride ourselves on the fact that the Industrial Revolution would probably not have been possible in the scale and speed with which it developed had it not been for the existence of legal structures such as joint stock companies and the proper accounting tools. The capital needed to produce the technological wonders of the twentieth century would not have been raised had it not been for the continuing development of appropriate legal and accounting structures. But the primordial forces which shaped our recent economic history was grounded in rationalism and they continue to be played out in a drama which continues to this day.

The first episode of this drama began near the conclusion of the Second World War when the Allied Powers agreed upon the two most important pillars of the postwar economic order. The first was the creation of the General Agreement on Trade and Tariffs and the second, the creation of the International Monetary Fund. The GATT was an attempt to create free exchange of commodities around the world and the IMF was created to ensure stability of the various media of exchange, namely, the various currencies, by pegging each currency to pre-agreed quantities of one physical commodity, namely, gold of a defined fineness (in fact 0.9 fineness). If the world remained as the postwar planners had conceived it, these twin pillars of economic growth would have continued to serve us, and serve us well, with the rationalism upon which they were so carefully based. Unfortunately, the scarcity of gold and the need for the provision of exploding cross border services conspired to destroy the foundations of this logic, a salutary reminder to us all that rationalism alone does not always work.

The second episode of this drama began on that fateful day of 15 August 1971 when President Nixon abolished the convertibility of the US dollar into gold by saying that the United States would no longer honour its pledge to other members of the IMF that it would exchange US $35 per ounce of gold, thus irrevocably changing the world monetary order. From 1972 onwards, all major currencies have 'floated', thus subjecting the economies of the world to the vagaries of the market rather than the decisions of its leaders, however well meaning they may be. This fundamental change of the world economic order created in its turn, financial markets of an entirely new magnitude, content, and geographic reach.

The third episode thus began. It began in the 1970's when the off shore US dollar loan or Eurodollar markets began. Currency and interest rate swaps and financial derivatives followed in the late 1970's and blossomed forth in the 1980's. Financial services thereby became international in nature and became also, a primary consumer of international telecommunications and information processing services. International capital flows became more and more pronounced. As of 1994 (the year in which full figures were available from the IMF), the net flows from developed countries to all developing countries were in the order of US $125 billion per year. And this is just the beginning. At the end of 1995, only a small fraction (estimated to be in the region of 5%) of the US $10 Trillion in US investment funds are invested outside of the United States. The same position applies to the US $3 Trillion in Japanese and US $6 Trillion European investment funds with the exception of the United Kingdom which invests some 20% of its investment funds outside of its territorial borders. The populations of the G-7 industrial countries are aging. Although retirement ages will in future no doubt increase, the investment funds must venture out for yield and diversification. As continuing economic development and privatisation take place in developing countries, external capital flows will continue to increase as will the size of their own domestic financial markets. It will therefore not come as a surprise to you that market access questions have assumed great importance in the international arena, giving rise to an extension of the GATT, namely, the GATS, the General Agreement for Trade in Services. The implementation of the European Monetary Union will hasten globalisation of financial services and markets. As Europe becomes a true common financial market, the balance of world competition for investment and financial services will change in Europe's favour. The next prize will be Asia, as it emerges from the current crisis.

As the Asian financial crisis has proved, movement of capital respects no borders. The growth of the financial markets of many Asian countries have been fuelled by international investments. As structural weaknesses in the financial markets of Asia were revealed, the international fund flows reversed. Asia continues, however, to have the same human, natural and physical productive resources as it had before. As the region deals with the structural weaknesses in its financial systems, its economies will adjust and emerge with stronger institutions able to deal, more rationally with a global market.

Soon into the next century, we will find that national borders will become meaningless as far as most international markets are concerned and national borders will certainly become meaningless for all international financial markets. Markets draw their behaviour from information. Financial markets in particular are intrinsically, markets of information in that what is bought and sold in these markets are obligations and obligations reside in information. Information will in the next century largely reside in cyberspace where London or Beijing is but a keystroke, or in the not too distant future, the flicker of a finger or a voice command away. The international financial markets will operate wholly in cyberspace linked up in computer networks. The challenges for governments, financial regulators and standard setters are therefore immense. Whereas, in legal terms, we draw our remit from domestic sources of power, the issues we will deal with are going to be overwhelmingly international in the future.

In recognition of this continuing drama, multilateral bodies such as the World Bank and the International Monetary Fund, Government leaders such as the leaders of the G-7 Industrial Countries, as well as international groupings such as the International Organisation of Securities Commissions (IOSCO), the Bank of International Settlement as the sponsor of the Basle Committee on Banking Supervision, the International Association of Insurance Supervisors, and the International Accounting Standards Committee have been working as never before to forge common understanding and standards. We are all in agreement that international markets require a highly concerted international, co-operative effort to ensure that the benefits to mankind of financial and technological innovation are realised and that the risks are adequately managed. These are important, rationalist foundations upon which the markets of the 21^st Century will, and should be, based. These are however international foundations upon which individual countries must abide. At most, they represent codes of conduct by which all countries must play by in order that the world may collectively prosper. Individual countries must still search for their particular contributions in the world stage. It is here that each country must devote further thought.

When markets are global and when there are few political imperatives to favour one block of countries against another, the justification for subsidies and monopolies will vanish. As technology can be bought, what is the one commodity which is fundamental to a country's productive wealth? The answer lies in human capital.

The World Bank has recently begun to survey the productive wealth of the industrialised countries. Thinly populated countries such as Australia (US $835,000 per person) and Canada (US $704,000 per person) come first but only 20% of that wealth is accounted for in human skills, whereas Japan (US $565,000 per person) has 80% of its productive wealth in human skills. The United States (US $421,000 per person, and 12^th in the list) has 60% of its productive wealth in human skills. But as Lester Thurow has observed in his most interesting, and in my view, very perceptive book, the "Future of Capitalism", technology is making skills and knowledge the only sources of sustained strategic advantage for countries and firms, yet the politics of democratic societies move them towards short-termism and maximum individual gratification, and this does not encourage the long term social investment needed to amass deep reserves of skills and knowledge in a population. That is the serious warning which Lester Thurow makes to the world. It is a warning that needs to be seriously heeded. We could either drift or we could do something about it. We are therefore at an important cross-road. The turn of this road, I would commend to you, my fellow sojourners, is that which is embedded in the concept of service to others as found in the philosophies of the Ancient World. This will bring us, full circle to the foundations of the civilisations which flourished at the beginning of this Millennium.

To illustrate my point, let me tell the stories of two ancient thinkers. Although separated by distance and circumstance, they were not separated in time, at least when the unit of time is a century or a millennium. They lived within a hundred years of each other, roughly 2500 years ago. They were both teachers and they shared the same, timeless message. One was Plato1 and the other, Confucius2. Both are well known to all and probably, most people will agree that each of these thinkers have in their own way exerted considerable influence in the subsequent development of Western and Eastern thought.

Plato lived in the city state of Athens. Athens practised democracy which is different to the democracy of the twentieth century, since not every adult had the vote. Only the propertied and the otherwise powerful were enfranchised. By a majority vote of the City's assembled voters, Plato's beloved teacher, Socrates was condemned to death for the crime of corrupting the City's youth. And as is well known, he had been doing nothing but teach. In fact 30 votes the other way would have made the difference for Socrates. Because it was such a narrow vote, most people would have looked the other way if Socrates had gone into exile but he chose to abide by the judgement. In Plato's dialogues, which is the way in which he was accustomed to write (now well known to us as the Socratic method), he records Socrates' spirited defence of the charge: "For it is my business to go about to persuade young men and old alike not to make their bodies and their riches their first and their engrossing care, but rather to give it to perfecting their soul. Virtue springs not from possessions, but from virtue springs possessions and all other human blessings, whether for the individual or for society.3" Following this dictum, Plato later suggested in his Republic that the ideal state would be ruled by philosopher guardians who seek neither possessions nor personal comfort but only the welfare and the ultimate perfection of their people.

Now to the story of Confucius. He lived in the tail end of a period in Chinese history called the Spring and Autumn era. Then, China was divided into belligerent principalities and the dark clouds of war were already gathering for one of the most turbulent periods of Chinese history, the era of the Warring States. Confucius, like Plato, devoted his life to teaching and studying the deeds and writings of ancient kings. Disillusioned with the treachery that he saw around him, he chronicled the history of his era and distilled from the legends and folklore of his time, a code of conduct for kings, officials, ordinary citizens, fathers, wives, sons, and daughters. This code, he hoped would bring peace to his time, time which was marred by wars and human suffering. At the centre of that code lay the ideal of service to one's fellow men. In an essay, which every novice seeking the wisdom of scholarship is supposed to read, called The Great Learning4, Confucius was recorded to have said: "The object of the Great Learning was (to enable the scholar) to lead the people to true virtue, to self renewal and to ultimate perfection".『 大 學 之 道 ， 在 明 明 德 ， 在 親 民 ， 在 止 於 至 善 。 』

Shorn of the metaphysics, it is plain that both thinkers tried to make sense of difficult times, and both prescribed service as an ideal to bring their fellow men out of their predicament. Even in this cynical, modern world of ours, I would suggest that the ideal of service propounded by our two ancient philosophers has just as much relevance today as it had 2500 years ago, for it is an ideal that bridges the culture of the East and of the West.

This leads me back to Lester Thurow's conclusion that skills and knowledge are the only sustainable strategic advantage of the future. It is clear that Hong Kong must deepen its pool of skills and knowledge in the light of the opportunities which are unfolding before us. The challenge of the future is the successful and sustained intermediation of savings into investment. To play that role, Hong Kong must be the intermediary par excellence. An intermediary provides service, and so a culture of service has to take root not only as an ethical end but also as a means of improving the lives of the people of the Special Administrative Region of Hong Kong and the people of the entire country. How can we make this culture of service take root? Simply, by realising at all times that we all set examples in whatever position we hold and in whatever we do. Mencius (another sage from the era of Confucius) had this to day: "Those who practice the Way must guide those who do not, to the Way. Those who are accomplished, must teach those who are not. Thus, the People rejoices in having elders and brethren. If those who practise the Way, do not guide those who do not, and the accomplished do not teach those who are not, then the distance between the virtuous and the wicked cannot but be more than an inch".

『 中 也 ， 養 不 中 。 才 也 ， 養 不 才 。 故 人 樂 有 賢 父 兄 也 。 如 中 也 棄 不 中 ， 才 也 棄 不 才 ， 則 賢 不 肖 之 相 去 ， 其 間 不 能 以 寸 。 』

For those whose profession it is to educate the future practitioners of the financial world, I would commend these thoughts. That skills and knowledge are only of importance if they could be applied appropriately for the benefit of the person and the benefit of society as a whole. That in educating the practitioners of the future, it may perhaps be helpful to stress that the role of each financial practitioner, be he or she, a banker, broker, dealer, or adviser, is that of an intermediary in the widest sense, namely, that in acting as such , that person is involved in a process which re-allocates the community's and the world's resources. Education might therefore have to aim not only to impart skills but to promote knowledge and critical thinking of the justifications behind the financial systems of the world, including of course, the theories and practice of regulation, against the all important criterion of service to mankind. By taking this approach, you might well produce the future philosophers of the financial world. I am not of course such an idealist that I would think that all students would graduate as philosophers but those who choose the profession of practitioner will be imbued or at least equipped with a train of thought which would help sustain a culture of service.

In parting, I would commend to you this final thought from Mencius : "The superior man does not lose his innocence."『 大 人 者 。 不 失 其 赤 子 之 心 者 也 。 』 In your search for the foundations of human endeavour, and the markets, I ask you to look at all things with the wonderment and innocence of a child. In Zhu Xi's commentary, he had this to say about Mencius' dictum: "The superior man, though he had experienced and therefore could articulate the ebbs and flows of a life devoted to learning, must retain his innocence, for only in innocence, can one see truth, and only in so looking at the world, can he aspire to attain the zenith of knowledge and accomplishment:.『 大 人 之 心 ， 通 達 萬 變 。 赤 子 之 心 ， 則 純 一 無 偽 而 已 。 然 大 人 之 所 以 為 大 人 ， 正 以 其 不 為 物 誘 ， 而 有 以 全 其 純 一 無 偽 之 本 。 然 是 以 擴 而 充 之 ， 則 無 所 不 知 ， 無 所 不 能 ， 而 極 其 大 也 。 』

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1.  Born BC circa 428

2. Circa BC 551 to 479

3. The Apology

4. The Book of Rites.  The essay opens by these words: My master, the philosopher Chang, says:-The Great Learning is a book transmitted from Confucius, and forms the gate by which novices will be initiated into the path of virtue.  That we can now perceive the order in which the ancients pursued their learning is solely owed to the preservation of this work, the Analects and Mencius coming after it.  Those who seek learning must commence their course with this, and then it may be hoped that they will be kept from error.