"HURSDAY, JANUARY 31, 1985
TOTAL DEPOSITS WITH BANKS CONTINUED TO GROW FOR THE FIFTH CONSECUTIVE MONTH, RISING BY 4.7 PER CENT FOLLOWING 2.3 PER CENT IN NOVEMBER, TOTÁL DEPOSITS WITH DEPOSIT-TAKING COMPANIES GREW ONLY MARGINALLY BY 0.2 PER CENT, AFTER HAVING FALLEN BY 0.5 PER CENT IN THE PREVIOUS MONTH. WHILE DEPOSITS WITH BANKS ROSE SUBSTANTIALLY BY 10.5 PER CENT OVER THE THREE MONTHS TO DECEMBER THOSE WITH DEPOSIT-TAKING COMPANIES FELL BY 0.2 PER CENT. THERE WAS THUS A SHIFT OF DEPOSITS IN FAVOUR OF BANKS, WHICH COULD BE EXPLAINED AT LEAST IN PART BY THE NARROWING DIFFERENTIAL BETWEEN MONEY MARKET INTEREST RATES AND HKAB DEPOSIT RATES DURING MOST OF THIS PERIOD.
FOR THE FIRST TIME STATISTICS ON SWAP DEPOSITS HAVE BEEN COLLECTED FROM BANKS ON A FORMAL BASIS. THESE INDICATE THAT AT THE END OF DECEMBER SOME $20 BILLION OR 14.6 PER CENT OF FOREIGN PRENCY FOSITS WITH BANKS WERE IN FACT HELD ON A SWAP BASIS. ... WHERE THE CUSTOMER HAS CONTRACTED WITH THE BANK TO PURCHASE HONG KONG DOLLARS AT A PRE-DETERMINED RATE WITH THE PROCEEDS OF THE FOREIGN CURRENCY DEPOSIT AT MATURITY. AN INFORMAL SURVEY CONDUCTED IN THE SUMMER OF 1983 SUGGESTED THAT SWAP DEPOSITS MIGHT THEN HAVE TOTALLED SOME $45 BILLION. THE RELATIVE ATTRACTION OF SWAP DEPOSITS WAS REDUCED BY THE ABOLITION OF INTEREST WITHHOLDING TAX ON HONG KONG DOLLAR DEPOSITS IN OCTOBER 1983, BUT CLEARLY THERE CONTINUE TO BE OCCASIONS WHEN THE MARGIN BETWEEN MARKET INTEREST RATES AND THE MAXIMUM DEPOSIT RATES PERMITTED BY HKAB RULES CREATES A SIGNIFICANT INCENTIVE TO PLACE FUNDS ON A SWAP BASIS. IT HAS LONG BEEN RECOGNISED THAT THE EXISTENCE OF SWAP DEPOSITS MAY DISTORT THE UNDERLYING TREND IN THE MONETARY STATISTICS AND HENCE RENDER INTERPRETATION DIFFICULT. THIS DIFFICULTY IS NOT RESOLVED BY THE POSSESSION OF JUST ONE MONTH'S FIGURES ON SWAP DEPOSITS, BUT THE AVAILABILITY OF SWAP STATISTICS SHOULD AID INTERPRETATION FROM NOW ON.
HONG KONG DOLLAR MONEY SUPPLY
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HONG KONG DOLLAR MONEY SUPPLY ON ALL DEFINITIONS ROSE SIGNIFICANTLY IN DECEMBER. WHILE HK$M1 (THE NARROWEST DEFINITION) ROSE BY 4.2 PER CENT, THE BROADER DEFINITIONS HK3M2 AND HK$M3 WERE UP BY 4.5 PER CENT AND 3.3 PER CENT RESPECTIVELY. THE CORRESPONDING GROWTH RATES IN NOVEMBER WERE 4.3 PER CENT, 6.4 PER CENT AND 4.5 DEP CENT.
IN THE THREE MONTHS TO DECEMBER, HKSM1 ROSE BY 10.4 PER CENT, HK M2 BY 15.3 PER CENT AND HROM3 EY 10.5 PER CENT. OVER THE YEAR,
RESPECTIVE GROWTH RATES WERE 17.9 PER CENT, 24.3 PER CENT AND 24.0 PER CENT.
TOTAL MONEY
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