XN000022-1986-02-26 — Page 39

WEDNESDAY, FEBRUARY 26, 1986

24

STABILITY THROUGH U.S.$ LINK

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HONG KONG HAS EXPERIENCED REMARKABLE STABILITY IN THE EXCHANGE RATE DESPITE VOLATILE CONDITIONS IN THE FOREIGN

EXCHANGE MARKETS IN 1985 THANKS TO THE LINK WITH THE U.S. DOLLAR, THE FINANCIAL SECRETARY, SIR JOHN BREMRIDGE, TOLD THE LEGISLATIVE COUNCIL TODAY.

MAINTENANCE OF THE LINK CONTINUED TO BE GOVERNMENT POLICY,

SIR JOHN SAID.

+THIS SHOULD NOW BE TAKEN FOR GRANTED. IT HAS SERVED

HONG KONG WELL, HE SAID.

22 MAJOR BILL ON BANKING READY FOR STUDY

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A MAJOR BILL TO REPLACE THE EXISTING BANKING AND DEPOSIT- TAKING COMPANIES ORDINANCES IS NOW READY AND WILL TAKE THE USUAL LEGISLATIVE COURSE, ALLOWING TIME FOR SCRUTINY AND AMENDMENT, SIR JOHN BREMRIDGE SAID TODAY.

INTRODUCING HIS FINAL BUDGET, SIR JOHN SAID THE NEW BILL WOULD EMBODY A DIFFERENT APPROACH TO PRUDENTIAL SUPERVISION.

+THIS APPROACH IS ONE THAT RELIES MORE ON THE COMMISSIONER OF BANK ING'S DIRECTION AND QUALITATIVE JUDGEMENT THAN ON QUANTITATIVE COMPLIANCE WITH TECHNICAL REQUIREMENTS.

+AT THE SAME TIME IT INTRODUCES A GREATER DEGREE OF ACCOUNTABILITY BY THE COMMISSIONER IN THE EXERCISE OF HIS POWERS, HE SAID.

IT WAS INTENDED THAT IMPLEMENTATION OF SOME OF THE NEW REQUIREMENTS WOULD BE PHASED IN OVER A PERIOD OF TIME, SIR JOHN SAID,

COMMENTING ON THE TAKEOVER OF THE INSOLVENT OVERSEAS TRUST BANK BY THE GOVERNMENT AND THE FACT THAT A FEW SMALLER LOCAL BANKS HAD SOUGHT STRONG PARTNERS TO IMPROVE THE IR POSITIONS, SIR JOHN SAID THE CAUSES OF THE PROBLEMS WHICH HAD EMERGED IN THE BANKING SECTOR WERE COMPLEX, AND OUTDATED PRUDENTIAL SUPERVISION HAD NOT HELPED.

NOTING THAT HE HAD MENTIONED IN HIS LAST BUDGET SPEECH THAT THE GOVERNMENT WAS EXAMINING VARIOUS OPTIONS FOR IMPROVEMENT IN THIS AREA, HE SAID EXTENSIVE CONSULTATION HAD BEEN UNDERTAKEN LAST YEAR WITH THE TWO ADVISORY COMMITTEES, THE HONG KONG ASSOCIATION OF BANKS, THE HONG KONG DEPOSIT-TAKING COMPANIES ASSOCIATION, THE SOCIETY OF ACCOUNTANTS, AND OTHERS.

/+THOUGH IT