XN000022-1980-10-23 — Page 29

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THURSDAY, OCTOBER 23, 1980

AND SUCH BENEFITS, MEASURED BOTH IN POLITICAL AND ECONOMIC TERMS, ARE OF INCREASING SIGNIFICANCE, HE ADDED.

ALTHOUGH NOT DIRECTLY RELATED, THE TWO PROPOSED PIECES OF LEGISLATION ARE ACCOMPANIED BY THE PROPOSAL TO INCORPORATE THE EXCHANGE BANKS' ASSOCIATION INTO A STATUTORY BODY, MR BROWN NOTED.

SPEAKING AS CHAIRMAN OF THE ASSOCIATION, HE BELIEVED THAT THE PROPOSAL DESERVED +UNQUALIFIED SUPPORT+ FOR AT LEAST TWO REASONS.

FIRST, IT IS LIKELY THAT THE NEW ARRANGEMENTS WILL BE MORE READILY ACCEPTABLE TO THE LARGE NUMBER OF INTERNATIONAL BANKS WHICH HAVE RECENTLY ENTERED THE HONG KONG MARKET.

+NOTWITHSTANDING THAT ALL LICENSED BANKS ARE CURRENTLY MEMBERS OF THE EXISTING ASSOCIATION IT CANNOT BE DENIED THAT MANY BANKS VIEW THE PRESENT EXCHANGE BANKS' ASSOCIATION AS A RELIC OF THE PAST AND SEE LITTLE BENEFIT TO THEMSELVES IN VOLUNTARY MEMBERSHIP WITH THE ACCOMPANYING OBLIGATION TO ABIDE BY ITS RULES.

+ IT IS IMPORTANT THAT OUR FINANCIAL MARKETS ARE CONDUCTED IN AN ORDERLY MANNER, AND THIS IS THE MORE SO DURING A PERIOD OF RAPID EXPANSION WHEN UNREGULATED COMPETITION COULD LEAD TO UNDESIRABLE PRACTICES.+

HE THOUGHT THAT A RECONSTITUTED ASSOCIATION WOULD PROVIDE THE OPPORTUNITY TO RECOGNISE THE NEW FORCES IN THE MARKET PLACE WHILE STATUTORY AUTHORITY WOULD ENABLE THE ASSOCIATION TO ASSUME A MORE EFFECTIVE ROLE.

THE SECOND REASON FOR SUPPORT IS PERHAPS MORE IMPORTANT, HE SAID.

+ IT MUST BE RIGHT, GIVEN THE INFLATIONARY TIMES IN WHICH WE LIVE AND THE RECOGNISED IMPORTANCE OF INTEREST RATES AS A TOOL TO IMPLEMENT MONETARY POLICY, THAT THE BODY WHICH SETS THESE RATES IN LIAISON WITH GOVERNMENT HAS THE AUTHORITY TO ENFORCE ITS DECISIONS.

+ TRUST THAT THE BILL TO BE INTRODUCED WILL ADEQUATELY COVER THIS REQUIREMENT.

SHOULD PROBLEMS ARISE IN OUR FINANCIAL MARKETS, MR BROWN SAID, THEY ARE MORE LIKELY TO SURFACE IN THE DEPOSIT-TAK ING COMPANIES SECTOR RATHER THAN AMONG THE LICENSED BANKS.

IT IS THEREFORE IMPORTANT THAT THE ENCOURAGEMENT BEING GIVEN BY THE GOVERNMENT TO THESE COMPANIES TO FORM AN ASSOCIATION BE CONTINUED UNTIL THIS DESIRABLE OBJECTIVE IS ACHIEVED, HE STRESSED.

+ONCE ACHIEVED IT MUST BE FOR CONSIDERATION WHETHER SUCH AN ASSOCIATION SHOULD ALSO BE GIVEN THE STATUS OF A STATUTORY BODY SO THAT ITS MEMBERS CAN ALSO BE SUBJECT TO A GREATER DEGREE OF DISCIPLINE AND CONTROL IN THE PUBLIC INTEREST,+ HE ADDED.

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