WEDNESDAY, MARCH 26, 1986
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HE SAID CAREFUL AND CLOSE CO-OPERATION AMONG ALL PARTIES CONCERNED WAS REQUIRED TO IMPROVE THE SITUATION.
ON THE REPEAL OF THE TAX ON INTEREST INCOME EARNED FROM OFFSHORE DEPOSITS, MR LI SAID THE FINANCIAL SECRETARY'S DECISION WAS TO BE HIGHLY COMMENDED.
HE SAID THE FINANCIAL COMMUNITY HELD THAT THE TAX VIOLATED THE + TERRITORIAL SOURCE + PRINCIPLE ON WHICH HONG KONG'S TAX SYSTEM WAS BASED.
MR LI THEN TURNED TO OTHER DEVELOPMENTS IN THE FINANCIAL SECTOR WHICH IN THIS VIEW CAUSED CONCERN AND REQUIRED COMMENT.
HE NOTED THAT IN THE PAST DECADE, THE MAJOR FINANCIAL CENTRES OF THE WORLD, INCLUDING HONG KONG, HAD BEEN FLOODED WITH FINANCIAL INNOVATIONS OF ALL KINDS.
ONE OF THEM, MR LI SAID, WAS
SECURITISATION+ WHICH WAS
THE GRANTING OF LOANS AND ADVANCES IN THE FORM OF MARKETABLE SECURITIES.
HE POINTED OUT THAT ONE IMPORTANT CONSEQUENCE OF THIS DEVELOPMENT WAS THAT THE TRADITIONAL DIFFERENCES BETWEEN LOANS AND SECURITIES HAD BECOME MUCH MORE BLURRED.
+ THE IMPLICATION FOR PRUDENTIAL REGULATION IS THAT THERE IS NO LONGER ANY CLEAR-CUT DEMARCATION BETWEEN THE JURISDICTIONS OF THE BANKING COMMISSION AND THE SECURITIES COMMISSION,+ HE SAID.
NOTING THAT THERE SHOULD BE GREATER CO-ORDINATION BETWEEN THE TWO BODIES FOR SUPERVISORY AND MONITORING PURPOSES MR LI SUGGESTED THAT IT MIGHT EVEN BE WORTHWHILE TO STUDY THE CASE OF MERGING THE TWO TO FORM A MORE COMPREHENSIVE AND EFFECTIVE SUPERVISORY AUTHORITY UNDER THE SECRETARY FOR MONETARY AFFAIRS.
MR LI SAID ANOTHER RECENT DEVELOPMENT REQUIRING COMMENT WAS THE SIGNIFICANT SHIFT IN THE HONG KONG DOLLAR AND FOREIGN CURRENCY COMPONENTS IN THE MONETARY AGGREGATES.
HE OBSERVED THAT THERE HAD BEEN A STEADY EROSION OF THE HONG KONG DOLLAR COMPONENT OF THE MONEY SUPPLY, WHICH WAS NOT GOOD FOR MONETARY STABILITY.
HE WAS CONCERNED ABOUT THE MEASURES THAT COULD BE ADOPTED TO PREVENT THE FURTHER EROSION OF THE HONG KONG DOLLAR DEPOSIT BASE AND STRESSED THIS WAS AN ISSUE WHICH SHOULD BE CLOSELY MONITORED AND CAREFULLY STUDIED.
LASTLY, MR LI PAID TRIBUTE TO THE FINANCIAL SECRETARY'S ACHIEVEMENTS, SAYING HE HAD PRESIDED WITH HONESTY AND INTEGRITY OVER HONG KONG'S ECONOMIC AND FINANCIAL SYSTEM DURING ONE OF THE MOST TRYING AND STORMY PERIODS IN ITS HISTORY.
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