MONDAY, APRIL 26, 1982
2
NEED FOR DIVERSIFICATION OF ECONOMY
****
THE RAPID GROWTH OF HONG KONG AS A FINANCIAL CENTRE IN RECENT YEARS HAS BEEN ACHIEVED IN THE ABSENCE OF ANY DIRECT MOVE ON THE PART OF THE GOVERNMENT DELIBERATELY TO DIVERT RESOURCES INTO THE FINANCIAL SECTOR, THE FINANCIAL SECRETARY, MR JOHN BREMRIDGE SAID THIS EVENING (MONDAY).
SPEAKING AT THE 1982 ANNUAL MEETING OF THE ASIAN-PACIFIC BANKERS' CLUB, MR BREMRIDGE SAID HE BELIEVED THAT HONG KONG'S FUTURE PROSPERITY AND STABILITY COULD BEST BE SECURED BY FURTHER DIVERSIFICATION OF OUR ECONOMY.
HOWEVER, HE SAID PRAGMATIC APPLICATION OF OUR PHILOSOPHY OF NON-INTERVENTIONISM TOWARDS DIVERSIFICATION REQUIRED THAT THE GOVERNMENT SHOULD ONLY ENSURE THAT THERE EXISTED NO UNNECESSARY
IMPEDIMENT TO DIVERSIFICATION INTO AND WITHIN THE FINANCIAL SECTOR.
+THUS WE PAY PARTICULAR AND CONTINUOUS ATTENTION TO PROVIDING A FAVOURABLE FRAMEWORK, INSTITUTIONAL AND REGULATORY, WITHIN WHICH AN EXPANDING FINANCIAL SECTOR CAN OPERATE.
+CONSEQUENTLY, FOR EXAMPLE, AN UNUSUALLY LARGE NUMBER OF AMENDMENTS HAVE BEEN INTRODUCED RECENTLY TO THE BANKING ORDINANCE AND THE DEPOSIT-TAKING COMPANIES ORDINANCE.+
MR BREMRIDGE SAID THESE AMENDMENTS WERE AIMED, INTER ALIA, AT FURTHER IMPROVING OUR PRUDENTIAL SUPERVISION OF THE FINANCIAL SERVICES SECTOR THEREBY REINFORCING THE STANDING IN THE INTERNATIONAL FINANCIAL COMMUNITY OF BANKS AND DEPOSIT-TAK ING COMPANIES INCORPORATED IN HONG KONG.
ON INTEREST RATES, THE FINANCIAL SECRETARY SAID THE OPENNESS OF OUR ECONOMY AND ITS HIGH DEGREE OF EXTERNAL DEPENDENCE MEANT THAT WE HAD RELATIVELY LITTLE SCOPE FOR MAINTAINING HONG KONG DOLLAR INTEREST RATES COMPLETELY
INDEPENDENTLY OF THE LEVEL OF US DOLLAR INTEREST RATES.
HE ALSO DID NOT BELIEVE THAT THERE SHOULD BE A FIXED AND RIGID RELATIONSHIP BETWEEN DOMESTIC DEPOSIT RATES AND EURODOLLAR DEPOSIT RATES.
HOWEVER, MR BREMRIDGE SAID HE DID RECOGNISE THAT THE DIFFERENTIAL BETWEEN DOMESTIC AND EURODOLLAR RATES COULD ONLY MOVE IN A RELATIVELY RESTRICTED RANGE BEFORE THE RESULTANT FLOWS INTO OR OUT OF HONG KONG, AND THE RESULTANT IMPACT ON THE EXCHANGE VALUE OF THE HONG KONG DOLLAR BEGAN TO PLACE AN UNACCEPTABLE STRAIN ON THE ECONOMY THROUGH THE DOMESTIC COST-PRICE STRUCTURE.
WITHIN THIS RANGE, HE SAID, HONG KONG DID HAVE SOME SCOPE FOR AN INDEPENDENT INTEREST RATE POLICY AND IT WAS AT THAT POINT THAT THERE WAS A DEFINITE NEED FOR THE GOVERNMENT TO INFLUENCE THE STRUCTURE OF DOMESTIC INTEREST RATES.
/AT PRESENT,