AFR 09 '86 16:39 GIS HK
the Exchange Fund. The cost of acquiring Hang Lung and OTB has already been written off in the Exchange Fund accounts and, even if we were to take a 'worst case' view of every other commitment into which the Fund has entered in providing support to banks and this in my view would be overly pessimistic the sum involved would still be less than half of the growth of these inner reserves in the last four years. So we are amply armoured. And the Fund's accounts are audited annually by the Director of Audit. These monies are clearly available when required for purposes which are inter vires the Exchange Fund Ordinance. It is a proper matter of concern that those involved should be frugal in using these funds to soothe banking difficulties. Indeed it is only in unusual circumstances that they are so used. There are many other normal areas in which acting as a quasi Central Bank there is Exchange Fund intervention. Some indeed are profitable, though that is not the main purpose. Moveover in emergency the whole Exchange Fund could in theory be called upon. There has been concern that we are using up these reserves. I hope that I have demonstrated that not only this is not true but they have actually grown considerably over these past four difficult years - a source of some comfort to me personally, and I hope to the banking community as a whole.
15.
Sir, I state again that the Government is committed to preserving the prosperity and stability of dong Kong. The reserves of the Exchange Fund in connection with the authorised powers and indeed express duties of the Commissioner of Banking and the Financial Secretary with regard to the Banking Ordinance and the Exchange Fund Ordinance respectively form a lender of last resort - a quasi central government bank such as exists in so many other places in the world. Such an institution in addition to many other confidential affairs must be ready when essential to consider support for local banks if and
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