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WEDNESDAY, MAY 9, 1990
"THE THREE-TIER SYSTEM HAS ALSO BEEN MODIFIED RECENTLY TO REPLACE LICENSED DEPOSIT TAKING COMPANIES AND REGISTERED DEPOSIT TAKING COMPANIES BY THE NEW CATEGORIES OF RESTRICTED LICENSED BANKS AND DEPOSIT TAKING COMPANIES.
"THIS FACILITATES FOREIGN BANKS WITH TOTAL ASSETS FALLING SHORT OF THE MINIMUM SIZE CRITERION FOR OBTAINING A BANKING LICENCE IN HONG KONG TO OPERATE HERE.
"IN
VIEW OF THE GROWING INTERDEPENDENCE OF FINANCIAL MARKETS AROUND THE WORLD AND ACROSS DIFFERENT MARKETS, WE ARE NOW DEVOTING EFFORTS ΤΟ BUILDING UP A PROPER FRAMEWORK FOR CONSOLIDATED SUPERVISION, HE SAID.
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ON THE MONETARY SIDE, REFORM MEASURES WERE INTRODUCED FACILITATE EFFECTIVE MONETARY MANAGEMENT UNDER THE LINKED EXCHANGE RATE SYSTEM, THE FINANCIAL SECRETARY SAID.
"THE ACCOUNTING ARRANGEMENT INTRODUCED IN 1988 HAS PROVED A USEFUL MECHANISM FOR PURSUING OUR MONETARY POLICY OBJECTIVE OF MAINTAINING EXCHANGE RATE' STABILITY. THE EXCHANGE FUND BILLS PROGRAMME INTRODUCED RECENTLY WILL FURTHER GIVE US AN ADDITIONAL MONETARY POLICY INSTRUMENT FOR THIS PURPOSE.
"WE HAVE BEEN SUCCESSFUL IN MAINTAINING OVERALL A STABLE MONETARY ENVIRONMENT. THIS HAS UNDOUBTEDLY HELPED THE CONTINUED DEVELOPMENT OF HONG KONG AS A FINANCIAL CENTRE," HE SAID.
"THE REMOVAL OF DISINCENTIVES SO AS TO ENHANCE HONGKONG'S COMPETITIVENESS AS A FINANCIAL CENTRE HAS LONG BEEN OUR POLICY. BUT THERE IS AN IMPORTANT QUALIFICATION WHICH IS THAT IT MUST ALSO BE CLEARLY IN THE WIDER PUBLIC INTEREST FOR PARTICULAR DISINCENTIVES BE REMOVED," SIR PIERS POINTED OUT.
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'EVERYBODY KNOWS THAT THE REMOVAL OF STAMP DUTY WOULD ENCOURAGE STOCK MARKET ACTIVITY, AT LEAST IN THE SHORT TERM. EVERYBODY KNOWS THAT THE REMOVAL OF PROFITS TAX ON INTEREST INCOME WOULD STIMULATE DEVELOPMENT OF THE CAPITAL MARKET IN HONG KONG. EVERYBODY KNOWS THAT TAX PAYERS WOULD BE RICHER IF THEY DID NOT HAVE TO PAY TAX, HE SAID.
"BUT THAT DOES NOT MEAN THAT WE SHOULD REMOVE THE VARIOUS FORMS OF TAX CONCERNED WITHOUT PROPER CONSIDERATION OF ALL THE IMPLICATIONS, INCLUDING THE COST OF DOING SO, HE ADDED.
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FINANCIAL SECRETARY POINTED OUT THAT THE CONSEQUENCES OF INTRODUCING TAX CHANGES HAD TO BE FULLY EXPLORED, NOTING THAT THE COMPLEXITIES WHICH MIGHT ARISE WERE WELL ILLUSTRATED BY THE RECENT HISTORY OF THE TAXATION OF INTEREST.
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IN 1982, FOREIGN CURRENCY DEPOSITS PLACED WITH LICENSED BANKS AND DEPOSIT-TAKING COMPANIES WERE EXEMPTED FROM INTEREST TAX. THIS WAS AN EXCEPTION TO THE HONG KONG SOURCE PRINCIPLE.
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