XN000022-1984-02-29 — Page 22

WEDNESDAY, FEBRUARY 29, 1984

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+AS HAS ALWAYS BEEN THE CASE, THE GOVERNMENT WILL INTERVENE IN THE FINANCIAL SECTOR WHEN CLEARLY NECESSARY, BUT WILL LIMIT MEASURES TO THE MINIMUM REQUIRED TO ENSURE SOUND BUSINESS PRACTICE AND A MEASURE OF PROTECTION FOR DEPOSITORS AND INVESTORS. THIS APPROACH WILL CONTINUE, SIR JOHN SAID.

HE SAID THAT AS ANNOUNCED EARLIER, A TEAM FROM THE BANK OF ENGLAND WAS HERE TO ASSIST IN A REVIEW OF SYSTEMS OF PRUDENTIAL SUPERVISION OF BANKS AND DEPOS IT-TAK ING COMPANIES.

+THE BANKING ORDINANCE WAS INTRODUCED IN 1964 WITH THE ASSISTANCE OF THE BANK OF ENGLAND. AFTER 20 YEARS IT SEEMS SENSIBLE TO TAKE AN OVERALL LOOK AT WHERE WE STAND. IF SO INDICATED, FURTHER LEGISLATION CAN BE INTRODUCED. THIS IS AN AREA WHERE NO GOVERNMENT CAN EVER BE SATISFIED WITH THE STATUS QUO, HE ADDED.

SIR JOHN SAID THE EXCHANGE RATE STABILISATION SCHEME, STARTED IN MID-OCTOBER LAST YEAR, HAD ACHIEVED ITS IMMEDIATE GOAL OF STABILISING THE EXCHANGE RATE AND RESTORING CONFIDENCE

IN THE HONG KONG CURRENCY.

HE SAID THE HONG KONG DOLLAR 7.80 RATE WAS NOW FAMILIAR, AND THE LOW OF $9.60 TO THE US DOLLAR WAS HISTORY.

+THE FINANCIAL COMMUNITY HAS ADAPTED QUICKLY TO THE NEW EXCHANGE RATE SYSTEM AND HAS THUS CONTRIBUTED TO ITS SUCCESS. I THANK ALL CONCERNED,+ HE SAID.

SIR JOHN ADDED THAT THE HONG KONG DOLLAR DEPOSIT BASE HAD AGAIN INCREASED, THOUGH PART OF THE INCREASE REFLECTED THE RE-DENOMINATION OF FOREIGN CURRENCY SWAP DEPOSITS INTO HONG KONG DOLLAR DEPOSITS AFTER THE 10 PER CENT INTEREST WITHHOLDING RATE WAS REMOVED.

STATISTICS, SIR JOHN SAID, HAD BEEN AFFECTED BY RECENT EVENTS BUT IT WAS CLEAR THAT FUNDS HAD BEEN FLOWING INTO HONG KONG ON A LARGE SCALE.

BILLION DOLLAR

BOND ISSUE PROPOSED

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THE FINANCIAL SECRETARY, SIR JOHN BREMRIDGE, SAID HE WOULD MOVE A RESOLUTION IN THE LEGISLATIVE COUNCIL NEXT MONTH TO PROVIDE THE GOVERNMENT WITH THE AUTHORITY TO RAISE A LOAN OF UP TO $1 BILLION BY THE ISSUE OF BONDS UNDER THE LOANS (GOVERNMENT BONDS) ORDINANCE.

THE LOAN WILL BE RAISED IN HONG KONG, IN HONG KONG CURRENCY, AND FOR THE PURPOSE OF THE GENERAL REVENUE.

IN HIS BUDGET SPEECH TODAY, SIR JOHN SAID THE PROCEEDS OF THE BOND ISSUE WILL BE TRANSFERRED TO THE CAPITAL WORKS RESERVE FUN.

AE SAID