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 modi- fications 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 the year 87 licences had been approved and 48 banks were also authorized to deal in foreign exchange. Many of these banks have branches or correspondents throughout the world and are thus able to offer comprehensive banking facilities. There are at present 20 full members of the Clearing House who also act as agents for 50 sub-members. Monthly clearings during the year averaged $2,877 million. Banking activities continued to expand; one new bank was licensed during the year, while some additional branches of existing banks were opened. The table at Appendix III illustrates the rapidity of expansion between December 1955 and December 1963. Total deposits had then reached $5,425 million and at the same date loans and advances to commerce and industry totalled $3,642 million.
This expansion and the difficulties in which one local bank found itself in 1961 led the Banking Advisory Committee to re- commend the revision of the Banking Ordinance, 1948, to provide more adequately for the supervision of banking operations. Mr H. J. Tomkins of the Bank of England spent some time in the Colony in the early part of 1962. His report on the Hong Kong banking system, published in April 1962, contained a full discus- sion of the situation together with recommendations for a new banking ordinance. These were circulated to interested parties whose comments were considered by the Banking Advisory Com- mittee before the formulation of drafting instructions. A new bill on banking to provide for the proper protection of the interests of depositors and for the adequate inspection of banks was read