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powers of control, both executive and legislative.
2.
Hong Kong has no central bank, but normal central
banking functions are undertaken through the Monetary
Affairs Branch of the Government Secretariat and by the
Commissioner of Banking, with appropriate assistance from
the Hong Kong and Shanghai Banking Corporation (HSBC),
which is, for example, the major note issuing bank.
3.
Currency notes are issued by HSBC and the Chartered
Bank under specific local ordinances and the Royal Charter
of the Chartered Bank. Apart from small fiduciary issues
(totalling HK$95 million) which are backed by securities
issued or guaranteed by the United Kingdom or Hong Kong
governments, issues of currency have to be backed by
interest-free certificates of indebtedness purchased from
the Exchange Fund. The Fund in turn invests the proceeds
either in foreign currencies or in Hong Kong dollars (as
deposits with the banks). The Fund is required to maintain
assets equal to 105% of its liabilities in respect of
certificates of indebtedness, but there is no requirement
for a specific proportion to be covered by foreign assets.
The profits of the note issue accrue to the Fund. Coins
are issued by the government and are also backed by assets
held with the Exchange Fund. As at end-1981, total notes
and coins in circulation amounted to HK$12.3 billion. The
Queen's head is used on coins and the armorial bearings
(in whole or in part) on notes.
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/4.