The Currency.
Chapter 4.
CURRENCY AND BANKING.
The unit of currency in the Colony is the Hong Kong dollar the value of which in terms of sterling fluctuated considerably until the silver standard was abandoned in December, 1935. The Currency Ordinance, 1935, set up an Exchange Fund and provided that the note-issuing banks should surrender to the fund all silver previously deposited against note issues and should deposit full sterling cover for all note issues thereafter. Since 1935 the value of the Hong Kong dollar has been maintained at approximately one shilling and three pence both before and after the Japanese occupation.
The Occupation Period.
During the Japanese occupation the Hong Kong dollar at first circulated side by side with the Japanese Military Yen, a currency which was imposed by the invading forces and which had no coverage or exchange relation or any other link with external money, an arbitrary exchange rate of Military Yen 1.00 Hong Kong Dollars 4.00 being fixed on 24th July, 1942. On 1st June, 1943, the use of the Hong Kong dollar was forbidden and from that time until the end of the war the only currency permitted was the Military Yen, the purchasing power of which dropped steeply with Japan's reverses until it became almost worthless at the time of the Japanese surrender.
The Liberation.
On 13th September, 1945, the former Hong Kong currency was formally restored by Proclamation of the Military Administration and Military Yen consequently lapsed into oblivion. This action caused less dislocation than might have been expected as many hoarded notes emerged and Government contrived to import adequate supplies of new notes. The subsidiary nickel coinage used before the war had entirely disappeared and was not revived during the period under review.
Note Issue and Banks.
Notes of denominations from five dollars upwards are issued by the Hong Kong and Shanghai Banking Corporation, the Chartered Bank of India, Australia and China and the Mercantile Bank of India. The Government issues notes of one dollar, ten cents, five cents and one cent. The Colony is included in the sterling bloc and the authorised banks for dealing in foreign exchange are, in addition to the three note- issuing banks mentioned above:
Thomas Cook and Sons, Ltd.
Chase Bank
National City Bank of New York, Inc. American Express Co., Inc.