growth of foreign currency deposits in 1983. Three seem particularly relevant, though there are others. Firstly, as I have said, the interest rate differential has generally been in favour of US dollar deposits. Secondly, a large part of
the increase
foreign currency deposits appears to have
represented swap deposits, which have no effect on the exchange rate and should for analytical purposes be regarded
as Hong Kong dollar deposits. And, thirdly, as foreign
currency deposits are reported in their Hong Kong dollar
equivalents, part of the increases in foreign currency
deposits reflects the valuation effect of a weaker Hong Kong
dollar. These various developments make it more than usually
difficult to interpret underlying monetary developments, but
the growth of the money supply and of credit as evidenced by
the statistics for loans and advances has markedly slowed
down.
8.
In this pause we are continuing to discuss possible
new measures to improve our control of the money supply. The difficulties remain considerable, and discussion cannot yet be
taken to mean that a quick conclusion is in hand. I can say
no more at present.
9.
The last six months were time of consolidation for
the monetary sector. The two-year transitional period for the
establishment of the three-tier structure for deposit-taking
institutions came to an end. The problems experienced in the
registered deposit-taking companies sector at the beginning of
the year, leading to the revocation of several registrations
by
the Commissioner of Deposit-taking Companies, appear to
have subsided. I believe that the three-tier structure gives
better protection for depositors and a sounder monetary
system. The maintenance, of a
of a stable and credible framework
with proper legislative discipline is important to the continued development of Hong Kong as a major international
financial centre.
4
/10. To