The long search for the next head of the Hong Kong Monetary Authority ended when Norman Chan Tak-lam - currently the director of the Chief Executive's Office - was appointed to succeed Joseph Yam Chi-kwong.

Chan, a founder of the HKMA with good connections in Beijing, was closely involved in the introduction of yuan banking services in Hong Kong, Credit Suisse analyst Tao Dong said.

"We believe greater integration between Hong Kong's financial systems and the mainland's will be crucial to the prosperity of the SAR's economy," Tao said, and Chan will be a "key driver in this important process."

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Chan has "considerable experience in HKMA operations and is a good appointment for the post," added Tao, who believes it is SAR policy to keep the US dollar peg system unchanged over the medium term.

Li Kui-wai, an associate professor of economics and finance at City University of Hong Kong, said Chan himself will not be driving new policies for financial integration with the mainland.

Rather, politicians and the market will lead those decisions, Li said, and Chan will implement them and come up with appropriate regulations. "Things are changing," he said. "Obviously, trading renminbi will be important, and he will handle this."

In his first stint at the HKMA starting in 1993, Chan, now 55, contributed to Hong Kong's financial development in a low-profile manner.

Working closely with Yam, Chan helped fend off speculators during the Asian financial crisis in 1998 by intervening in the stock market and later disposing the shares through the Tracker Fund of Hong Kong (2800).

Chan had been widely tipped to succeed Yam when he reached retirement age. But he quit as HKMA deputy chief executive in 2005 and went to work for Standard Chartered (2888). That year, Chan said of his unexpected decision, was a "mid-life sabbatical."

"Many people told me I can't be chief executive if I go," Chan was quoted as saying. "Yes, you are right. If I want to get that, I should not have left. But that's a `life without punctuation' - not the thing I desire."

Chan returned to government in July 2007. Last year, he came under fire from lawmakers, who said he mishandled the controversial appointments of undersecretaries and political assistants.