WEDNESDAY, NOVEMBER 15, 1978
THIS PROGRAMME WOULD REQUIRE DEPOSIT-TAKING COMPANIES AS WELL AS BANKS TO BE INSURED WITH A GOVERNMENT INSURANCE FUND TO BE SET UP AGAINST POSSIBLE LOSS IN CASE THEY WIND UP OR DISSOLVE THEIR BUSINESS.
UNDER THIS SCHEME. THE DEPOSIT-TAKING COMPANIES OR BANKS WILL PAY ANNUAL CONTRIBUTIONS TO THE GOVERNMENT'S DEPOSIT INSURANCE FUND.
IN REPLY, THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON-CAVE, SAID THE DELAY IN PUTTING FORWARD THE PROPOSALS FOR DETAILED PRUDENTIAL SUPERVISION OF DEPOSIT-TAKING COMPANIES WAS LARGELY DUE TO A GREAT DEAL OF TIME SPENT IN VERY DETAILED AND TECHNICAL DISCUSSIONS BOTH ABOUT THE PRINCIPLES INVOLVED AND THE IR DETAILED APPLICATION.
HE AGREED WITH MR. LI COMPLETELY THAT IT SHOULD BE A RELATIVELY SIMPLE EXERCISE TO PROVIDE FOR THE SUBMISSION OF MONTHLY RETURNS BY DEPOSIT-TAKING COMPANIES AS A STATUTORY REQUIREMENT, BUT HE POINTED OUT THAT IN SO DOING, THE GOVERNMENT ACCEPTS A DEGREE OF RESPONSIBILITY FOR THE PRUDENTIAL SUPERVISION OF THOSE COMPANIES.
+HOW FAR IS IT RIGHT FOR THE GOVERNMENT TO ACCEPT THAT RESPONSIBILITY IF IT DOES NOT HAVE THE POWER TO ENSURE THAT ALL
IS WELL IN THE COMPANIES?+ HE ASKED.
MR. HADDON-CAVE ALSO POINTED OUT THAT THE ATTITUDE OF THE GOVERNMENT TOWARDS PROTECTION OF DEPOSITORS HAS CHANGED SINCE THE DEPOSIT-TAKING COMPANIES ORDINANCE WAS PASSED TWO-AND-A-HALF YEARS
AGO.
+AND WE NOW ACCEPT - AFTER LONG DISCUSSIONS WITH THE FINANCIAL COMMUNITY THAT WE HAVE A DUTY TOWARDS THE LARGER DEPOSITOR, AS WELL AS THE SMALLER.
+1 DO NOT SAY THAT WE ACCEPT RESPONSIBILITY FOR THE ULTIMATE REPAYMENT OF DEPOSITS, LARGE OR SMALL. BUT WE ACCEPT THAT WE NEED TO SUPERVISE THE ATTITUDES OF ALL INSTITUTIONS WHICH TAKE DEPOSITS, LARGE OR SMALL,
+THAT IS THE GENERAL SOCIAL INTEREST AND IS CONSISTENT WITH OUR EMERGENCE AS AN INTERNATIONAL FINANCIAL CENTRE,+ HE SAID.
THE FINANCIAL SECRETARY ALSO SAID THAT IN THE COMING MONTHS, THE GOVERNMENT WILL BE LOOKING AT THE LIQUIDITY REQUIREMENTS AND THE DEFINITION OF LIQUID ASSETS, FOR LICENSED BANKS AS WELL AS FOR REGISTERED DEPOSIT-TAKING COMPANIES.
+THESE REQUIREMENTS AND DEFINITIONS MUST BE COMPLEMENTARY, IF NOT IDENTICAL, AND SO MUST BE EXAMINED TOGETHER,+ HE SAID.
ON MR. SO'S SUGGESTION TO SET UP AN INSURANCE FUND TO PROTECT DEPOSITORS WITH BOTH BANKS AND DEPOS IT-TAK ING COMPANIES, MR. HADDON-CAVE SAID THIS SUGGESTION RAISES MANY DIFFICULT QUESTIONS ON THE EXTENT OF THE INSURANCE COVERAGE AS WELL AS BAS IS OF THE INSURANCE PREMIUM TO BE CHARGED.
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