36
FINANCIAL STRUCTURE
At the same time the government undertook to issue one-dollar currency notes to replace the silver dollars in circulation. In 1960, because of the heavy expense of keeping clean notes in circulation, a dollar coin of cupro-nickel and about the same size as a British florin was re-introduced. Stocks are sufficient to replace all notes issued but, although banks have been asked to withdraw all notes received in the course of business, many still remain unredeemed although few appear to be in active circulation. The dollar notes and coins are backed by security funds which maintain their assets partly in Sterling and partly in Hong Kong dollar bank accounts. The government also issues subsidiary coins of the value of 5 cents, 10 cents and 50 cents, and notes of the value of 1 cent.
Under Regulation 7 of the Emergency (Bank Control) Regulations 1965, made on 9th February, Sterling was declared legal tender in the Colony, to any amount, at the rate of HK$16-£1. This regulation was made following a shortage of bank notes, which arose from runs on various banks early in February. It was sub- sequently revoked on 8th June.
Since 1935 the value of the Hong Kong dollar has been maintained at approximately 1s 3d Sterling. Banks may deal with the public at a few points on either side of this rate, both to allow for a profit margin and, to a slight extent, to meet fluctuations in demand and supply.
The total currency in nominal circulation at 31st December 1965 was:
Bank note issue
Government $1 note issue ... Government $1 coin issue
Subsidiary coins and notes
GA GA GA SA
1,628,780,555 15,698,487
$
$
45,176,972
$
50,162,042
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
In January, prior to the festival of Chinese New Year when it is customary for Chinese people in Hong Kong to make an