CURRENCY AND BANKING
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The Colony has been a part of the sterling area since August 1941. 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, with some modifications made necessary by the position of Hong Kong as an entrepôt.
BANKING
The Banking Ordinance provides that no institution may engage in banking without obtaining a licence from the Governor in Council and that each bank must publish an annual balance sheet. At the end of 1961 there were eighty five licensed banks, of which forty three were authorized to deal in foreign exchange. A list of the latter is given in Appendix III. Many of these banks have branches or correspondents throughout the world and are thus able to offer comprehensive banking facilities. Interbank transac- tions are facilitated by a clearing house association with fifty three members. Monthly clearings in 1961 averaged $2,177 million. Total bank deposits at 30th June 1961 were $3,056 million and at 30th September 1961 were $3,271 million; on the same dates total loans and advances to commerce and industry were $2,214 million and $2,260 million respectively.
Major share issues by the Kowloon Motor Bus Co and Jardine Matheson and Co Ltd during the year imposed some strain on the liquid assets of local banks. In June there was a run on the Liu Chong Hing Bank Ltd which was able to meet its obligations to depositors only after negotiating a loan with the Hongkong and Shanghai Banking Corporation and the Chartered Bank. The inherent strength of the Colony's banking institutions was shown by the way in which they were able to take these difficulties in their stride with relative ease.
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The growth of local branch banking in subsidiary centres of commerce and industry accelerated very rapidly during the year. At the end of 1961 there were one hundred and one branch offices, including several in the New Territories, which is some fifty more than at the end of 1960. In May 1961, the Hongkong and Shanghai Banking Corporation opened the Colony's first mobile bank, which tours villages in many parts of the New Territories.