FINANCIAL AND MONETARY AFFAIRS
Kong dollar and foreign currency denominated debt instruments. It has been fully integrated with the interbank payment systems, and is linked up with the international central securities depositories like Euroclear and Clearstream to enable overseas investors to trade CMU securities. It also has established links with the central securities depositories in Australia, New Zealand and the Republic of Korea.
Through a seamless interface with the US Dollar RTGS system, the CMU enables members to settle US dollar securities on a DvP basis. As such, the outstanding amount of US dollar securities lodged with the CMU has increased twofold to US$1.67 billion from the previous year.
To enhance the debt clearing and settlement infrastructure in Hong Kong, the CMU started to provide clearing, settlement and custodian facilities on US Treasuries to its members in December. This facility enables CMU members to clear and settle US Treasuries on a real-time DvP basis during business hours of Hong Kong.
Hong Kong Monetary Authority
The HKMA was established in April 1993. The Exchange Fund (Amendment) Ordinance 1992 provides for its establishment.
The HKMA's policy objectives are to maintain currency stability, within the framework of the Linked Exchange Rate System, through sound management of the Exchange Fund, monetary policy operations and other means deemed necessary; to ensure safety and stability of the banking system through the regulation of banking business and the business of taking deposits, and the supervision of Als; and to promote efficiency, integrity and development of the financial system, particularly payment and settlement arrangements.
The HKMA is an integral part of the Government, but can employ staff on terms different from those of the Civil Service to attract personnel of the appropriate experience and expertise. Its staff and operating costs are charged directly to the Exchange Fund instead of the general revenue. The HKMA is accountable to the Financial Secretary, who is advised by the Exchange Fund Advisory Committee on matters relating to the control of the Exchange Fund.
The HKMA seeks advice on policy matters routinely from the Banking Advisory Committee and Deposit-Taking Companies Advisory Committee. Both committees are established under the Banking Ordinance. They are chaired by the Financial Secretary and comprise members from the banking industry and other relevant professions. Members of the committees are appointed by the Financial Secretary under the authority delegated by the Chief Executive.
The Banking Ordinance provides the legal framework for banking supervision in Hong Kong. Under the ordinance, the HKMA is the licensing authority responsible for the authorisation and revocation of all AIs, as well as the approval and revocation of money broker licences. The HKMA seeks to maintain a regulatory framework that is fully in line with international standards, primarily those recommended by the Basel Committee on Banking Supervision. The objective is to devise a prudential supervisory system to help preserve the general stability and effective working of the banking system while at the same time providing sufficient flexibility for AIs to make commercial decisions. Hong Kong's framework of banking supervision is in line with. the Core Principles for Effective Banking Supervision promulgated by the Basel Committee.
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