1988-07-15 16:25 MONETARY AFFAIRS BRANCH.
852 5 865 6146 P.10
(a)
the Exchange Fund debiting the Account HK$785 million; and
(b) HSBC debiting Standard Chartered's clearing
account with HSBC HK$785 million.
The monetary effects of this transaction will be that, other things being equal, both the Balance and NCB will be reduced by HK$785 million. Interbank interest rates will as a result (and by design) be driven higher, thus giving support to the exchange rate.
13.
Alternatively, in response to the exchange rate being at 7.85, Hong Kong dollars may be transferred from the General Revenue to the Exchange Fund, to the extent that there are surplus General Revenue balances in the banking system. Assuming that HK$500 million is transferred from the General Revenue to the Exchange Fund and the Treasury meets that demand by withdrawing a HK$300 million deposit from the Hang Seng Bank and HK$ 200 million deposit from the Ilang Lung Bank, the Hong Kong dollar settlements will be effected as follows:
(a) the Exchange Fund credits Treasury's account
with it by HK$500 million and issues a Debt Certificate of that amount to the Treasury;
the Exchange Fund debits the Account HK$500 million;
(b)
(c)
HSBC debits Hang Seng Bank's clearing account with itself HK$300 million;
(a)
HSBC debits Hang Lung Bank's clearing
account with itself HK$ 200 million;
(e)
Hang Seng Bank debits the Treasury's deposit account with itself HK$300 million; and
(£)
Hang Lung Bank debits the Treasury's deposit account with itself HK$ 200 million.
The monetary effects of this transaction will be that, other things being equal, both the Balance and NCB will be reduced by HK$500 million. Interbank interest rates will again be driven higher, giving support to the exchange
rate.
14.
The undertaking by HSBC to maintain a balance on the Account no less than the NCB of the rest of the banking system means that it will have in effect created for itself a clearing account. Thus, when HSBC purchases for its customers US dollars with Hong Kong dollars, NCB