XN000022-1982-05-12 — Page 2

WEDNESDAY, MAY 12, 1982

MONEY SUPPLY AND FINANCIAL STATISTICS FOR MARCH 1982

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THE MONETARY AGGREGATES FOR MARCH 1982 WERE AFFECTED BY VARIOUS STRUCTURAL CHANGES, ACCORDING TO MONEY SUPPLY AND FINANCIAL STATISTICS PUBLISHED TODAY,

THUS, AS A RESULT OF THE EXEMPTION, FROM FEBRUARY 25, FROM INTEREST WITHHOLDING TAX OF INTEREST ON FOREIGN CURRENCY DEPOSITS HELD IN HONG KONG, THERE WAS A SUBSTANTIAL INCREASE IN FOREIGN CURRENCY (VERY LARGELY US DOLLARS) TIME DEPOSITS WITH BANKS AND DTC'S, AND TOTAL MONEY SUPPLY, ON THE BROADER DEFINITIONS (M2 AND M3), GREW CONSIDERABLY FASTER THAN ITS HONG KONG DOLLAR COMPONENT.

THERE WAS ALSO A MARKED SHIFT OF DEPOSITS FROM THE DEPOSIT- TAKING COMPANY SECTOR TO THE BANKING SECTOR IN THE MONTH, CAUSING M3 TO INCREASE BY LESS THAN M2.

THE SHIFT REFLECTED THE INFLUENCES OF SOME SPECIAL FACTORS.

FIRSTLY, AS A RESULT OF AMENDMENTS TO THE HONG KONG ASSOCIATION OF BANKS' INTEREST RATE RULES, EFFECTIVE FROM MARCH 1, LICENSED BANKS HAVE BEEN ABLE TO COMPETE FREELY FOR DEPOSITS OF AT LEAST $500 000 MATURING IN LESS THAN THREE MONTHS.

SECONDLY, IN ACCORDANCE WITH THE TRANSITIONAL ARRANGEMENTS SET UP IN 1981 FOR THE INTRODUCTION OF THE THREE-TIER MONETARY SECTOR, MOST REGISTERED DEPOSIT-TAKING COMPANIES WERE ALREADY BEGINNING TO RUN DOWN THE TOTAL OF THEIR SHORT-TERM DEPOSITS.

THIRDLY, A LARGE REGISTERED DEPOSIT-TAKING COMPANY, WHICH WAS GRANTED A LICENCE UNDER THE BANKING ORDINANCE IN FEBRUARY, STARTED TO OPERATE AS A LICENSED BANK IN MARCH.

TABLE 1 (TRANSMITTED BY FACSIMILE WITH TABLE 2) SETS OUT THE DETAILED FIGURES FOR MARCH 1982, AND FOR EARLIER MONTHS, FROM THE STATISTICS COLLECTED UNDER THE MONETARY STATISTICS ORDINANCE. TABLE 2 SETS OUT SOME SELECTED FIGURES FROM THE QUARTERLY ANALYSIS OF LOANS AND ADVANCES FOR USE IN HONG KONG, BY SECTOR.

MONEY SUPPLY

AFTER A FALL OF EIGHT PER CENT IN FEBRUARY, THE MONEY SUPPLY ON THE NARROWEST DEFINITION, M1, FELL BY 1.1 PER CENT IN MARCH, REFLECTING A FURTHER REDUCTION IN NOTES AND COINS HELD BY THE PUBLIC.

M2-TOTAL ROSE BY 11.2 PER CENT AND HK$M2 BY 3.8 PER CENT IN MARCH, AFTER FALLING BY, RESPECTIVELY, 0.6 PER CENT AND 2.2 PER CENT IN FEBRUARY. M3-TOTAL ROSE BY 4.6 PER CENT IN MARCH, FOLLOWING AN INCREASE OF ONLY 0.1 PER CENT IN THE PREVIOUS MONTH. HK$M3, HOWEVER, FELL BY ONE PER CENT, AFTER FALLING BY 1.2 PER CENT IN FEBRUARY.

IN THE FIRST QUARTER OF THE YEAR, TOTAL M3 ROSE BY 7.1 PER CENT, COMPARED TO AN INCREASE OF 5.2 PER CENT IN THE PREVIOUS QUARTER- HK$M3 FELL BY 0.5 PER CENT, FOLLOWING A RISE OF 4.6 PER CENT IN THE PREVIOUS QUARTER.