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WEDNESDAY, APRIL 17, 1991
TO THE EXTENT THAT THE BONDS TO BE ISSUED WOULD BE HELD BY MEMBERS OF THE PUBLIC, SIR PIERS SAID THIS WOULD ENCOURAGE SAVINGS AND DISCOURAGE CONSUMER SPENDING.
WHEN THE BONDS WERE HELD BY BANKS AND OTHER AUTHORIZED INSTITUTIONS IN HONG KONG, THEY WOULD HAVE THE EFFECT OF REDUCING THE AMOUNT OF MONEY THAT WOULD OTHERWISE BE AVAILABLE FOR CREDIT EXPANSION.
"THE ACTUAL IMPACT WILL, OF COURSE, DEPEND ON HOW THE PROCEEDS OF THE BOND PROGRAMME ARE MANAGED.
"THE OFFICE OF THE EXCHANGE FUND HAS THE NECESSARY MONETARY MANAGEMENT SKILLS то DISCHARGE THIS RESPONSIBILITY EFFECTIVELY, OPERATING WITHIN OUR STABLE MONETARY FRAMEWORK TO PRODUCE AS FAR AS POSSIBLE, AN ANTI-INFLATIONARY MONETARY ENVIRONMENT," SIR PIERS SAID.
THE ISSUE OF EXCHANGE FUND BILLS HAD THE SAME IMPACT.'
THE TOTAL AMOUNT OF BILLS OUTSTANDING WAS NOW JUST SHORT OF HK$10 BILLION.
THE BILLS WERE HELD MOSTLY BY BANKS WHO ARGUABLY WOULD OTHERWISE BE LENDING MORE TO CUSTOMERS.
"THIS IS ONE REASON WHY THE GROWTH RATE OF HONG KONG DOLLAR LOANS HAS SLOWED DOWN FROM OVER 30 PER CENT IN 1989 TO AROUND 15 PER CENT IN 1990.
"LAST WEEK, AFTER CONSULTING THE EXCHANGE FUND ADVISORY COMMITTEE, 1 INCREASED THE MAXIMUM ISSUE SIZES OF THE 91-DAY, 182- DAY AND 364-DAY BILLS TO HK$500 MILLION, HK$400 MILLION AND HK$300 MILLION RESPECTIVELY," SIR PIERS SAID.
THE DIRECTOR OF THE OFFICE OF THE EXCHANGE FUND HAD BEEN GIVEN THE DISCRETION TO DETERMINE THE ACTUAL SIZE OF EACH ISSUE IN THE LIGHT OF MARKET CONDITIONS, SUBJECT TO THOSE MAXIMA.
"I SHOULD, HOWEVER, EMPHASIZE AGAIN THAT THE OVERRIDING OBJECTIVE OF MONETARY MANAGEMENT IN HONG KONG CONTINUES
TO BE THE MAINTENANCE OF EXCHANGE RATE STABILITY UNDER THE LINKED EXCHANGE RATE SYSTEM, WHICH HAS SERVED HONG KONG EXTREMELY WELL AGAINST THE BACKGROUND OF NOT INFREQUENT SHOCKS.
"THE ROOM FOR USING MONETARY MEANS INFLATION IS THEREFORE LIMITED, HE SAID.
SPECIFICALLY TO ('URB
AS FAR AS THE EFFECT ON INFLATION RATE WAS CONCERNED, SIR PIERS HE TOOK SOME COMFORT FROM THE RECENT STRENGTHENING OF THE US
SAID DOLLAR.
THE MOVEMENT OF THE US DOLLAR HAD A CONSIDERABLE INFLUENCE THE PRICES OF OUR IMPORTS IN HONG KONG DOLLAR TERMS.
FROM APRIL TO DECEMBER LAST YEAR, THE US DOLLAR DEPRECIATED ABOUT 15 PER CENT AGAINST THE JAPANESE YEN, THE CURRENCY OF LARGEST SUPPLIER OF HONG KONG'S RETAINED IMPORTS, HE SAID.
ON
BY
THE
/THE CONCURRENT