FINANCIAL STRUCTURE
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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.
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 nomiñal circulation at 31st December 1966 was:
-
Bank note issue
Government $1 note issue
Government $1 coin issue
Subsidiary coins and notes
...
$1,730,407,000 14,940,487
$
$ 54,271,860
$ 52,761,202
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
Bank deposits in the Colony increased steadily to reach a record figure of $8,405 million at the end of the year, representing an increase of 15.9 per cent over the previous year's figure. Loans and advances increased by $342 million; these, as a percentage of bank deposits, amounted to 64 per cent at the end of the year, compared with 69.5 per cent at the end of 1965. There was evidence that banks generally were being more selective in the granting of loans and advances.
The Banking Ordinance 1964 provides that banking business shall be transacted in the Colony only by a company licensed for that purpose. Each bank is required to have a minimum paid-up capital of $5 million, or the equivalent in foreign currency, and to build up published reserves of an amount equal to its paid-up