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FINANCIAL AND MONETARY AFFAIRS
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HONG KONG's financial sector comprises an integrated network of institutions and markets which, under various forms of regulation, provide a wide range of products and services to local and international customers and investors.
Some 513 authorised institutions from about 40 countries conduct business under the Banking Ordinance and the presence of 81 of the world's top 100 banks has helped promote the territory as an international financial centre.、
The external assets of the banking sector were ranked the fourth largest in the world and the forex turnover was the sixth largest in 1993.
Hong Kong also has the second largest stock market in Asia outside Japan. During the year under review, the Hang Seng Index reached a succession of new records, closing 115.67 per cent higher at 11 888.39 points on December 31. It was also the year when 'H' shares of state-owned enterprises of the People's Republic of China were first listed on the local exchange.
In January, the government announced that the Bank of China will become the third note-issuing bank in Hong Kong in 1994.
On April 1, the Hong Kong Monetary Authority was set up to oversee monetary and reserves management and banking supervision.
During the year, the Hong Kong Government also successfully sold the Overseas Trust Bank to a subsidiary of the Guoco Group Limited for a total consideration of $4,457 million. The Overseas Trust Bank was taken over by the government in June 1985. It was the last government-owned bank returned to the private sector.
Financial Institutions
Hong Kong maintains a three-tier system of deposit-taking institutions licensed banks, restricted licence banks and deposit-taking companies, which are collectively called authorised institutions.
Banking licences are granted at the discretion of the Governor in Council, in accordance with the provisions of the Banking Ordinance. In September 1992, the Governor in Council made a number of changes to the criteria for bank licence applications as part of a regular review of such criteria. In the case of a local applicant incorporated in Hong Kong, the criterion that it should be predominantly beneficially owned by Hong Kong interests has been broadened to enable close association and identification with the territory to be taken into consideration. Apart from the then prevailing requirements of a paid-up capital