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CURRENCY & BANKING—
The Currency
Chapter 4.
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 shill- ing and three pence, both before and after the Japanese occupation.
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 issue comprises notes of one dollar, ten cent, five cent and one cent denomina- tions and coins of ten cent and five cent denominations.
The Colony is included in the sterling area. Exchange control is administered under powers conferred by the Defence (Finance) Regulations 1940. The system of control is based on that in force in the United Kingdom and other parts of the sterling area, with modifications necessitated by the position of Hong Kong as an entrepôt. Twenty five banks, including the three note-issuing banks mentioned above, are authorized to deal in foreign exchange.
In addition to these incorporated banks, there are in the Colony many Chinese banks which handle a considerable volume of remittances from Chinese living overseas to their relatives in China.
Under the provisions of the Banking Ordinance, 1948, no company may carry on banking business without being licensed.
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