XN000022-1983-02-22 — Page 3

2

TUESDAY, FEBRUARY 22, 1983

+WE ALL KNOW THAT SIR RUN RUN IS A BUSY MAN AND THAT HE HAS MADE MANY OTHER CONTRIBUTIONS TO THE WELFARE OF THE HONG KONG COMMUNITY, SIR RUN RUN EPITOMISES THE TRUTH OF THAT SAYING THAT IF YOU WISH TO GET SOMETHING DONE THEN ASK A BUSY MAN TO DO IT. YET THE SIZE OF HIS CONTRIBUTION IS MATCHED ONLY BY THE DEGREE OF HIS MODESTY.

+SIR RUN RUN, I AM SURE THAT ALL YOUR FRIENDS HERE THIS EVENING WOULD WISH TO JOIN WITH ME IN CONGRATULATING YOU WARMLY ON THE AWARD WHICH I HAVE BEEN ASKED TO MAKE TO YOU THIS EVENING. AND IT GIVES ME THE VERY GREATEST PLEASURE BOTH OFFICIALLY AND PERSONALLY TO ASK YOU TO STEP FORWARD AND RECEIVE THE AWARD THE QUEEN'S BADGE OF HONOUR FOR DISTINGUISHED SERVICE TO THE WORK OF THE BRITISH RED CROSS SOCIETY.+

PROPERTY SLACK SAID BEHIND DTC FAILURES

****

THE SECRETARY FOR MONETARY AFFAIRS, MR DOUGLAS BLYE, TODAY (TUESDAY) ATTRIBUTED THE FAILURE OF A FEW REGISTERED DEPOSIT-TAKING COMPANIES TO A SLOWDOWN IN ECONOMIC ACTIVITY GENERALLY AND SHARP DOWNWARD ADJUSTMENTS IN PROPERTY AND LAND PRICES IN PARTICULAR,

IN A LUNCHEON SPEECH TO THE HARVARD BUSINESS SCHOOL ASSOCIATION, MR BLYE SAID THE REQUIREMENT UNDER THE THREE-TIER STRUCTURE FOR DEPOSIT-TAKING COMPANIES TO RUN DOWN ALL SHORT-TERM DEPOSITS BY JUNE THIS YEAR MIGHT WELL HAVE CONTRIBUTED TO THESE PROBLEMS, BUT HE WAS NOT CONVINCED THAT WAS THE CRITICAL FACTOR.

MR BLYE SAID THE PROBLEMS EXPERIENCED BY THE FINANCIAL SECTOR COULD NOT HAVE BEEN FORESEEN IN APRIL 1981 WHEN AMENDMENTS WERE MADE TO THE BANKING AND DEPOSIT-TAKING COMPANIES ORDINANCE FOR THE INTRODUCTION OF THE THREE-TIER SYSTEM.

HE SAID THE GOVERNMENT HAD THREE RESPONSIBILITIES IN RESPECT OF THE FINANCIAL SECTOR OF THE ECONOMY: TO ATTEMPT TO PROTECT MEMBERS OF THE PUBLIC AGAINST EVENTUALITIES AGAINST WHICH THEY CANNOT BE EXPECTED TO PROTECT THEMSELVES, TO ATTEMPT TO ENSURE THAT THE FINANCIAL SECTOR ADEQUATELY SERVICES THE REQUIREMENTS OF A GROWING AND DEVELOPING ECONOMY AND TO ENSURE THAT THE DEVELOPMENT OF HONG KONG AS A FINANCIAL CENTRE IS NOT UNREASONABLY CONSTRAINED.

MR BLYE SAID THERE WERE TWO MAIN REASONS FOR THE THREE-TIER STRUCTURE: TO HELP ENSURE THE MAINTENANCE OF THE INTEREST RATE AGREEMENT AS AN INSTRUMENT OF MONETARY POLICY AND TO PROTECT THE SMALLER DEPOSIT-TAKING INSTITUTIONS FROM +CUT THROAT+ COMPETITION.

J

+ IN THE CIRCUMSTANCES OF TODAY, THE PROBLEMS WHICH SOME DEPOSIT-TAKING COMPANIES HAVE RECENTLY EXPERIENCED MIGHT HAVE BEEN CONSIDERABLY WORSE HAD IT NOT BEEN FOR THE INTRODUCTION OF THE THREE-TIER SYSTEM, HE SAID.

/THIS WAS