-7
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"World financial markets have become more volatile. Banks in Hong Kong are also having to cope with higher interest rates, slower growth in residential mortgage lending, and strong competition for time deposits."
The January results of HKMA's survey of 40 licensed banks indicate significant migration of deposits from current and savings accounts to the newly deregulated time deposits.
"However, the January figures will have been distorted by the sharp rise in interest rates to defend the HK dollar and by the rise in the note circulation ahead of the Chinese New Year.
"This uncertainty provides an additional reason to take longer to assess the situation," Mr Carse said.
"Taking these factors into account, we consider that the third phase should be deferred to allow more time to assess the impact of the first two phases of deregulation.
"Our intention is to conduct a full assessment in August/September, taking into account the half-year results of banks.
"We remain committed to deregulating time deposits unless further steps would result in instability in the monetary and banking system," Mr Carse said.
End/Tuesday, March 14, 1995