FINANCIAL STRUCTURE
35
November 1967, and it ended after the pound was allowed to float downwards in June 1972. Early in the following month the Hong Kong Government decided to fix the exchange value of the Hong Kong dollar in terms of US dollars instead of sterling. But in November 1974 this link was broken as well and the Hong Kong dollar was allowed to float independently. Since then its value has fluctuated according to market conditions. Appendix 5 sets out changes in the exchange value of the Hong Kong dollar from 1946 to November 1974.
During 1976 the Hong Kong dollar strengthened appreciably but, unlike the previous year, it was not subject to the severe fluctuations experienced by many other currencies. At the end of 1976 the overall value of the Hong Kong dollar against the currencies of Hong Kong's major trading partners, as measured by a trade-weighted index, was some seven per cent higher than at the end of 1975 and nine per cent higher than in the period immediately before the currency floated.
Until 1971 Hong Kong kept virtually all its official external reserves in sterling. Holdings were then progressively diversified and, by late 1976, only about 20 per cent was held in sterling and the balance in several other currencies.
Since the beginning of 1973, transactions between Hong Kong and overseas countries have been free of all exchange control restrictions.
Banking- =
The use of the word 'bank' in Hong Kong is restricted to banks licensed under the Banking Ordinance and to representative offices of foreign banks. The ordinance provides for the supervision and inspection of banks by the Commissioner of Banking and obliges the banks to meet certain minimum requirements with respect to their capital and liquidity. At the end of 1976 there were 74 licensed banks with a total of 759 banking offices, and also 93 representative offices of foreign banks.
Bank deposits increased during 1976 by 21 per cent to $44,030 million at Decem- ber 31. Loans and advances increased by 22 per cent to reach $42,735 million. Banking statistics for the past three years are shown in Appendix 12.
Finance companies owned by foreign banks and other non-bank financial institu- tions which take deposits from the public are now required to register under the Deposit-taking Companies Ordinance which came into effect on April 1, 1976. By the end of the year 179 companies had registered under the ordinance.
Securities
The Securities (Amendment) Ordinance 1976 was enacted in August to correct certain difficulties and anomalies which had become apparent since the Securities Ordinance came into operation in 1974. The amendments are concerned for the most part with clarification and application, and none involves a change in the basic principle of the ordinance. The Securities (Stock Exchange Listing) Rules 1976 also came into effect in August 1976 under the Securities Ordinance. The rules provide