XN000022-1986-11-10 — Page 3

MONDAY, NOVEMBER 10, 1986

+ THE INTEREST OF INTERNATIONAL BANKS IN COMING TO HONG KONG CONTINUES UNDIMINISHED, WITH NINE BANKING LICENCES ISSUED SO FAR THIS YEAR.+

MR JACOBS SAID THAT THE EXPERIENCE HAD HELPED IN PRODUCING THE NEW BANKING ORDINANCE, WHICH, AFTER EXTENSIVE CONSULTATION WITH THE INDUSTRY, CAME INTO EFFECT ON SEPTEMBER 1 THIS YEAR.

+ ALTOGETHER THE NEW ORDINANCE SHOULD PROVIDE A MORE EFFECTIVE FRAMEWORK FOR PRUDENTIAL SUPERVISION OF THE BANKING SYSTEM.+

HE NOTED THAT HONG KONG HAD FOUR FACTORS WHICH FAVOURED ITS DEVELOPMENT AS A FINANCIAL CENTRE -- ITS LOW TAXATION, FLEXIBILITY, LEGAL SYSTEM AND LANGUAGE, AND GEOGRAPHY.

ON FLEXIBILITY, MR JAOCBS SAID HONG KONG HAD A SMALL AND COMPARATIVELY TIGHTLY ORGANISED ADMINISTRATION, WELL ABLE TO MOVE QUICKLY WHEN THE NEED AROSE.

+WHEN THERE IS A SITUATION CALLING FOR A SWIFT RESPONSE THEN OUR MECHANISMS ARE UP TO THE TASK. IF REGULATIONS OR INSTITUTIONAL ARRANGEMENTS NEED TO BE CHANGED IN RESPONSE TO MARKET DEVELOPMENTS, THIS CAN BE ACHIEVED WITHOUT DELAY AND WITHOUT STRUCTURAL DAMAGE, + HE SAID.

+OUR LAW IS BASED ON THE ENGLISH LEGAL SYSTEM ALTHOUGH WE HAVE OUR OWN STATUTES AND REGULATIONS TO SUIT OUR OWN REQUIREMENTS. NEVERTHELESS WE ARE TIED IN WITH THE THINKING OF OTHER COMMON LAW JURISDICTIONS. THIS IS PARTICULARLY RELEVANT IN RELATION TO LONDON AND NEW YORK.

ENGLISH

+OUR LANGUAGE OF BUSINESS LARGELY REMAINS ENGLISH. HAS BECOME THE INTERNATIONAL LANGUAGE OF FINANCE AND COMMERCE AND ITS USE IN HONG KONG IS OF INESTIMABLE ADVANTAGE.

+AND, MOST IMPORTANT FOR THE FUTURE, THERE IS SPECIFIC PROVISION IN THE SINO-BRITISH DECLARATION FOR THE PRESERVATION OF BOTH THE LEGAL SYSTEM AND THE ENGLISH LANGUAGE.

+ THE LAST FACTOR, BUT NOT THE LEAST, IS GEOGRAPHY. OUR LOCATION ON THE COAST OF CHINA HAS LED TO NOTEWORTHY DEVELOPMENTS IN RELATION TO HONG KONG'S ROLE VIS A VIS THE MAINLAND.+

MR JACOBS SAID CHINA HAD RECENTLY MADE INCREASING USE OF

HONG KONG'S FINANCIAL SECTOR.

IN ADDITION TO THE PROVISION OF FUNDS AND FINANCIAL INTERMEDIATION, HE ADDED, HONG KONG OBVIOUSLY HAD MUCH TO CONTRIBUTE TO THE MAINLAND IN RELATION TO THE IMPROVEMENT OF MANAGEMENT SKILLS, THE PROVISION OF EXPERTISE, AND THE PROMOTION OF TECHNOLOGY TRANSFER.

+1 BELIEVED THESE FOUR FACTORS THAT I HAVE MENTIONED WILL CONTINUE TO SERVE HONG KONG WELL INTO THE FUTURE, AND THAT THE DEVELOPMENT OF HONG KONG AS A FINANCIAL CENTRE WILL CONTINUE, +