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WEDNESDAY, NOVEMBER 5, 1986
HE SAID HE WHOLEHEARTEDLY SUPPORTED THE GOVERNMENT'S DETERMINATION NOT TO CHANGE THE PREVAILING LINKED EXCHANGE RATE SYSTEM THOUGH HE OBSERVED THE MECHANICS OF THE PRESENT SCHEME DID NOT SEEM TO BE WORKING AS WELL AS WAS FIRST ENVISAGED.
HE SUGGESTED THAT THE GOVERNMENT SHOULD CONSIDER HOW THE LINKED EXCHANGE RATE SYSTEM COULD BE FURTHER REFINED SO THAT THE ARBITRAGE PROCESS COULD FUNCTION MORE EFFICIENTLY.
NOTING THAT THE FINANCIAL COMMUNITY IN HONG KONG GENERALLY WELCOMED THE RATIONALE BEHIND THE BANKING ORDINANCE 1986, MR LI POINTED OUT THAT THE NEW LEGISLATION NEVERTHELESS IMPOSED CONSIDERABLE ADDITIONAL RESTRICTIONS ON THE OPERATION OF THE FINANCIAL INSTITUTIONS AND CALLED FOR SPECIAL ATTENTION TO CERTAIN ISSUES, ONE OF WHICH WAS THE CAPITAL TO RISK ASSETS RATIO.
HE EXPLAINED THAT THE STATUTORY RATIO HAD FORCED A NUMBER OF FOREIGN DEPOSIT-TAKING COMPANIES TO SHIFT SOME OF THE IR FINANCIAL ACTIVITIES TO OTHER CENTRES DUE TO THEIR DIFFICULTIES IN COMPLYING WITH IT AND HAD RESULTED IN A DETRIMENTAL EFFECT ON HONG KONG AS AN INTERNATIONAL FINANCIAL CENTRE CATERING FOR ALL FINANCIAL SERVICES,
+1 BELIEVE THE IMPLEMENTATION OF THE NEW BANKING ORDINANCE SHOULD BE FLEXIBLE SO AS NOT TO DISCOURAGE OR DRIVE AWAY REPUTALLE FORE IGN INSTITUTIONS WHICH HAVE ADDED STRENGTH TO OUR FINANCIAL COMMUNITY, + HE SAID.
HE THEREFORE URGED THE GOVERNMENT TO TAKE WHATEVER STEPS WERE NECESSARY TO MAINTAIN HONG KONG'S ATTRACTIVENESS AS AN INTERNATIONAL FINANCIAL CENTRE, INCLUDING MORE FLEXIBILITY IN BANKING REGULATIONS, SUCH AS HAVING RESTRICTED LICENCES FOR INSTITUTIONS WITH RESTRICTED FUNCTIONS,
MR LI ALSO SAID GOVERNMENT SHOULD CONSIDER COMBINING ALL THE RESPONSIBILITIES OF MONEY LENDERS UNDER THE UMBRELLA OF THE MONETARY AFFAIRS BRANCH AND TO REVIEW THE EXISTING ORDINANCE BECAUSE THE CURRENT FRAGMENTARY ARRANGEMENT FOR LICENSING AND SUPERVISING MONEY LENDERS WAS FAR FROM SATISFACTORY.
HE SAID HE AGREED THAT A SECOND PRUDENTIAL SUPERVISORY PRACTICE WAS GOOD FOR ALL FINANCIAL INSTITUTIONS BUT CAUTIONED THAT REGULATORS SHOULD NOT BE MISTAKEN AS SUBSTITUTES FOR BANKERS, WHO ULTIMATELY BORE THE RESPONSIBILITY FOR MAKING SOUND COMMERCIAL DECISIONS.
+ I BELIEVE OVER-RESTRICTIVE FINANCIAL REGULATIONS AND CUMBERSOME REPORTING REQUIREMENTS WILL EVENTUALLY WEAKEN THE POSITION OF OUR FINANCIAL INSTITUTIONS, AND AT THE SAME TIME, UNREALISTICALLY RESTRICT THE IR NORMAL ACTIVITIES, HE SAID.
/MR LI