FINANCIAL AND MONETARY AFFAIRS
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minimum level of income for contribution purposes. The accrued benefits will be fully vested in the scheme members and can be transferred from scheme to scheme when employees change or cease employment. A self-employed person will have to contribute 5 per cent of his or her relevant income. In normal circumstances, benefits. must be preserved until retirement.
A statutory body, the Mandatory Provident Fund Schemes Authority (MPFA) tasked with the responsibility of the prudential regulation and supervision of the MPF System and compliance with the MPFSO, was set up in September 1998. Another statutory body, the Mandatory Provident Fund Schemes Advisory Committee, has also been established to advise the MPFA on the operation of the MPFSO.
The MPFSO also provides for an appeal board to hear appeals against the decisions of the MPFA, which includes approval of trustees, registration of schemes, and giving consent to changes to a registered scheme. The appeal board was set up in October.
Since its establishment, the MPFA has proceeded with the preparatory work essential for launching the MPF System. The main areas of preparatory work include the development and installation of an information management system, approval of MPF trustees, preparation of approval of products and registration of schemes, as well as the preparation for exemption of certain ORSO schemes from MPF requirements. In respect of public education and publicity for instilling public awareness and understanding, the MPFA will intensify its publicity and promotion efforts in year 2000. Moreover, the MPF system has been included in the Government's major publicity campaign for 2000-01. All relevant departments will co-operate to publicise this MPF system which affects the general public.
To facilitate the enforcement of the MPFSO, the MPFA has issued all the major guidelines to serve providers to help them prepare for licensing applications and compliance with the various statutory requirements.
Determined efforts will continue to be made in 2000 to prepare for the full implementation of the MPF System.
Financial Links between Hong Kong and the Mainland
Hong Kong has been serving as the Mainland's primary channel for international fund-raising but the cross-border capital flows have by no means been one-way. Direct investment and interbank fund flows have developed in both directions. Hong Kong banks have also stepped up their business activities in the Mainland. Hong Kong has also facilitated the Mainland's overseas fund-raising activities via its equity and debt markets.
Cross-border fund flows among financial institutions have also grown in the last two decades. Over the years, the Mainland has accumulated a substantial amount of funds in Hong Kong dollars from trading activities and inward investment. These funds are placed with financial institutions in the Mainland and are subsequently channelled back to Hong Kong through the interbank market.
Since 1980, external liabilities of authorised institutions in Hong Kong to financial institutions in the Mainland have grown at an average rate of over 33.4 per cent per annum to $236 billion by the end of December. Over the same period, claims on