FINANCIAL STRUCTURE
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introduced early in 1969, through the mechanism of the Exchange Fund, to bring within the cover of the guarantee a substantial portion of that part of the Colony's sterling reserves which are held by the banking system in the absence of a central bank. While the guarantee remains in force, the Hong Kong dollar is automatically protected from the effects of any change in sterling exchange rates so far as its capital assets are concerned. This does not mean, however, that the value of the Hong Kong dollar could necessarily be maintained if such an event was followed by substantial devalua- tions by Hong Kong's trade competitors to the detriment of her trading position.
BANKING
Bank deposits in the Colony increased again during 1970 to reach a new record figure of $14,955 million at the end of the year, a rise of 21.6 per cent over the previous year-end figure.
Loans and advances increased to $9,670 million and, as a per- centage of bank deposits, amounted to 64.7 per cent at the end of the year, compared with 64.1 per cent at the end of 1969.
At the end of 1970 there were 70 incorporated banks in the Colony with a total of 399 banking offices, an increase of 37 banking offices during the year. In addition, 11 representative offices of foreign banks were given approval to open during the year, making a total of 32 at the end of the year.
Fifty-one of the licensed banks are Authorised Banks for the operation of Exchange Control in the Colony. Together with the un- authorised banks, they have branches and correspondents through- out the world and offer a comprehensive banking service of the highest order.
Monthly bank clearings during the year averaged $10,261 million. The tables at Appendix 14 illustrate the growth of the banking system over the past 15 years.
STOCK EXCHANGES
At the end of 1970 there were seven stock exchanges incorporated in the Colony under the provisions of the Companies Ordinance, including four incorporated during the year. However, only two