Impect: An appreciating RMB will impact the Hong Kong economy in direct and indirect ways.

Indirectly, it spurs capital inflows into Hong Kong, drives down local interest rates, creates an accommodative monetary environment and yields substantial wealth effects from a surging stock market when economic and corporate profit growths are still robust. Accordingly, domestic investment and consumption are boosted when the stock market rises for a fourth consecutive year, shifting the main growth impetus inward and augmenting the sustainability of rapid growth.
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Baring:Internal control

Leeson doubled as both the floor manager for Barings' trading on the Singapore International Monetary Exchange and head of settlement operations. In the latter role, he was charged with ensuring accurate accounting for the unit. The positions would normally have been held by two different employees. By allowing Leeson, as trading floor manager, to settle his own trades, Barings short-circuited normal accounting and internal control/audit safeguards. In effect, Leeson was able to operate with no supervision from Londonan arrangement that made it easier for him to hide his losses. People at the London end of Barings were all so know-all that nobody dared ask a stupid question in case they looked silly in front of everyone else. Some people raised eyebrows about Leeson's activities but were ignored. consequence of a failure of management and other internal controls of the most basic kind

The need for improved communication at all levels (and also between all levels) of management, as well as increased efficiency in the application and interpretation of rules, principles and procedures, will be considered. The Basel Committee categorized into five groups, types of control breakdowns which are characteristic of ailing banks and these are as follows: Lack of adequate management oversight and accountability, and failure to develop a strong control culture within the bank - The absence or failure of key control structures and activities such as segregation of duties, approvals, verifications, reconciliations and reviews of operating performance Inadequate communication of information between levels of management within the bank particularly the communication of information to higher ranked officials (senior management) - Inadequate or ineffective audit programmes and monitoring activities. Risk Management :The term Operational Risk Management (ORM) is defined as a continual cyclic process which includes risk assessment, risk decision making, and implementation of risk controls, which results in acceptance, mitigation, or avoidance of risk. ORM is the oversight of operational risk, including the risk of loss resulting from inadequate or failed internal processes and systems; human factors; or external events. Advice for baring Management teams have a duty to understand fully the businesses they manage. Responsibility for each business activity has to be clearly established and communicated. Relevant internal controls, including independent risk management, have to be established for all business activities Clear segregation of duties is fundamental to any effective control system.

2008 Financial tsunami Government :

Governments have enacted large fiscal stimulus packages, by borrowing and spending to offset the reduction in private sector demand caused by the crisis. The U.S. executed two stimulus packages, totaling nearly $1 trillion during 2008 and 2009. During the last quarter of 2008, these central banks purchased US$2.5 trillion of government debt and troubled private assets from banks. This was the largest liquidity injection into the credit market, and the largest monetary policy action, in world history. The governments of European nations and the USA also raised the capital of their national banking systems by $1.5 trillion, by purchasing newly issued preferred stock in their major banks. Federal Reserve was implementing another monetary policy creating currency as a method to combat the liquidity trap. By creating $600,000,000,000 and inserting this directly into banks the Federal Reserve intended to spur banks to finance more domestic loans and refinance mortgages. Governments have also bailed out a variety of firms, incurring large financial obligations. U.S. government agencies have committed or spent trillions of dollars in loans, asset purchases, guarantees, and direct spending. Impact: Over 100 mortgage lenders went bankrupt during 2007 and 2008. Concerns that investment bank Bear Stearns would collapse in March 2008 resulted in its fire-sale to JP Morgan Chase. The financial institution crisis hit its peak in September and October 2008. Several major institutions eitherfailed, were acquired under duress, or were subject to government takeover. These included Lehman Brothers, Merrill Lynch, Fannie Mae, Freddie Mac, Washington Mutual, Wachovia, and AIG.
2010 Europe debt crisis( solution) In order to reach these goals the Facility is devised in the form of a special purpose vehicle (SPV) that will sell bonds and use the money it raises to make loans up to a maximum of 440 billion to euro-zone nations in need. The bonds will be backed by guarantees given by the European Commission representing the whole EU, the eurozone member states, and the IMF. The EFSF will be combined to a 60 billion loan coming from the European financial stabilization mechanism (reliant on guarantees given by the European Commission using the EU budget as collateral) and to a 250 billion loan backed by the IMF in order to obtain a financial safety net up to 750 billions.
The ECB has announced a series measures aimed at reducing volatility in the financial markets and at improving liquidity:1)First, it began open market operations buying government and private debt securities.2)Second, it announced two 3-month and one 6month full allotment of Long Term Refinancing Operations (LTRO's).3)Thirdly, it reactivated the dollar swap line with Federal Reserve support. Impact: Asia Currency crisis: The IMF created a series of bailouts ("rescue packages") for the most affected economies to enable affected nations to avoid default, tying the packages to reforms that were intended to make the restored Asian currency, banking, and financial systems as much like those of the United States and Europe as possible. In other words, the IMF's support was conditional on a series of drastic economic reforms influenced by neoliberal economic principles called a "structural adjustment package" (SAP). The SAPs called on crisis-struck nations to cut back on government spending to reduce deficits, allow insolvent banks and financial institutions to fail,

and aggressively raise interest rates. The reasoning was that these steps would restore confidence in the nations' fiscal solvency, penalize insolvent companies, and protect currency values. 1200 150 8 28 7% 1999 11

IFC(HK REACT) First,, developing Hong Kong as the global offshore Renminbi center. As the Renminbi is fast becoming the second largest currency in the world, it is imperative that Hong Kong plays a significant role in Renminbi financial services. Recently, Hong Kong has been designated as one of the five cities that can do trade settlement in RMB. As China allows trade to be settled in its currency, there will be more RMB in circulation outside of the mainland of China. Hong Kong can play a useful role to become the global offshore RMB center to help facilitate the flow. Second, Hong Kong should further enhance its services in non-RMB based products. Before the RMB becomes fully convertible, Hong Kong will remain the dominant center for Chinas non-RMB denominated cross-border transactions. Hong Kong must utilize this precious window of 10 years to aggressively expand China focused non-RMB denominated businesses, increase the capacity and function of its capital markets, develop a deeper bench of China-facing market participants, and attract greater number of foreign enterprises to be based in Hong Kong. Over time, these efforts will enable Hong Kong to become a leading regional center in derivative. Third, Hong Kong should support the increasingly global footprint and management needs of Chinese enterprises. Many Chinese enterprises, including financial institutions, want to become more global and to adopt international best practices. I believe more Chinese enterprises will choose to establish overseas headquarters in addition to their existing China-based headquarters-Hong Kong. It will have the added advantage for the Chinese enterprises to attract and retain global talents as Hong Kongs compensation level and structures are closer to the developed markets of the world.

Executive compensation
the current complaints focus on two issues: executives are paid too much, and current incentive-pay schemes are flawed because the connection between executive pay and company performance is mixed at bestand at worst has led to a series of dysfunctional behaviors.Less clear is evidence about the link between executive compensation and performance. The most comprehensive survey examining the link between CEO pay and performance found that changes in firm performance account for only 4 percent of the variance in CEO pay. This may in part reflect CEOs ability to game the system, or even the perverse effects of incentives that promote dysfunctional behavior. The solutions offered for the problems of excessive levels of executive pay and the need to strengthen the link between pay and performance often hit on the same themes: strengthen the independence of directors and compensation committees; increase the shareholders rights to elect directors and to express their views on compensation plans, to discourage gaming and align incentives more closely with the aims of the owners. It is also tempting to suggest that these problems can be solved by better compensation schemes or improved techniques to link CEO pay to stock performance.