WEDNESDAY, FEBRUARY 25, 1987
20
NO INTENTION TO STIFLE FINANCIAL INNOVATION'
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IT IS THE GOVERNMENT'S PHILOSOPHY TO LEAVE THE FINANCIAL MARKET TO DEVELOP ON ITS OWN WITH ONLY THE MINIMUM AMOUNT OF REGULATION NECESSARY TO UPHOLD ITS INTEGRITY, THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, SAID TODAY (WEDNESDAY).
+1 DO NOT WANT TO STIFLE FINANCIAL INNOVATION.+ YET THE SUPERVISOR OF AUTHORISED FINANCIAL INSTITUTIONS MUST ALSO HAVE REGARD TO THE INTERESTS OF DEPOSITORS, HE SAID.
TURNING TO BANKING AND THE SECURITIES MARKET, MR JACOBS SAID THE LATEST FASHION WAS WHAT WAS DESCRIBED AS +SECÚRITISATION+.
+AS WITH SOME OTHER FASHIONS, ONE IS LEFT WITH THE FEELING THAT THE WEARER MAY BE IN DANGER OF BEING OVER-EXPOSED. SHE NEEDS ADEQUATE COVER- OTHERWISE SHE MAY CATCH A COLD.
+NOW THAT THE BANKING SECTOR HAS BEEN NURSED BACK TO HEALTH, IT TOO MUST TAKE CARE TO MAINTAIN ADEQUATE CAPITAL COVER OTHERWISE IT TOO MAY CATCH A COLD..
MR JACOBS SAID SECURITISATION OF DEBTS EXPOSED FINANCIAL INSTITUTIONS TO WHAT WAS FOR THEM A NEW TYPE OF RISK- A RISK CHARACTERISED IN PARTICULAR BY THE REPLACEMENT OF ASSETS WHICH WERE GENERALLY SECURED BY UNSECURED PAPER ASSETS- AND THE PRICE OF THOSE PAPER ASSETS WAS VERY OFTEN HIGHLY SENSITIVE TO CHANGES IN INTEREST RATES.
+IN HONG KONG INTEREST RATES DO AND WILL CONTINUE TO CHANGE FREQUENTLY UNDER THE LINKED EXCHANGE RATE SYSTEM,+ HE ADDED,
MR JACOBS SAID THE NEW BANKING ORDINANCE HAD INTRODUCED PROVISIONS WHICH REQUIRED ADEQUATE CAPITAL TO SUPPORT RISK ASSETS ON THE BOOKS OF AUTHORISED INSTITUTIONS.
ALTHOUGH THESE PROVISIONS HAD NOT YET COME INTO EFFECT BECAUSE IT WAS FELT THAT A TRANSITIONAL PERIOD OF AROUND TWO YEARS WOULD BE REQUIRED FOR ADJUSTMENT, HE SAID HE HOPED THESE INSTITUTIONS WERE TAKING EARLY ACTION TO CAPITALISE THEMSELVES ADEQUATELY.
THE BANKING ORDINANCE HAD GONE SMOOTHLY, HAVING ONLY BEEN IN OPERATION FOR SIX MONTHS, HE SAID.
BUT SOME AMENDMENTS TO CLARIFY THE MEANING OF CERTAIN PROVISIONS HAD BEEN FOUND NECESSARY, AND THESE AMENDMENTS WERE UNDERGOING THE USUAL CONSULTATIVE PROCESS.
/SUBJECT TO .......