XN000022-1990-12-07 — Page 4

3

OF

"WE ARE CONTINUING TO WATCH DEVELOPMENTS ON THIS FRONT CAREFULLY AND ARE IN CLOSE DIALOGUE WITH THE HONG KONG ASSOCIATION BANKS, HE SAID.

||

EARLIER, SIR PIERS SAID "THE MAINTENANCE OF EXCHANGE RATE STABILITY IS THE TOP PRIORITY OF MONETARY MANAGEMENT IN HONG KONG" AND "THE LINKED EXCHANGE RATE SYSTEM HAS UNDOUBTEDLY PLAYED A VITAL IN SECURING THAT STABILITY”.

"AS

PART

THE AUTHORITY RESPONSIBLE FOR MONETARY MANAGEMENT, I NEED TO TO ENSURE AS FAR AS POSSIBLE THAT WE ARE IN A POSITION TO CONTINUE

THOSE DELIVER TO THE PEOPLE AND BUSINESS COMMUNITY OF HONG KONG, AND WHO DEAL WITH THEM, A STABLE CURRENCY.

"THIS REQUIRES DILIGENT CARE IN DEALING WITH ANY SHORTCOMINGS IN OUR SYSTEM. IN OTHER WORDS, WE MUST SEEK TO ENSURE THAT OUR SYSTEM

IS SHOCKS AND THAT THE STABILITY OF OUR CURRENCY

NOT CAN WITHSTAND UNDERMINED, HE SAID.

++

HIGHLIGHTING VARIOUS MONETARY MANAGEMENT REFORM MEASURES

THE INTRODUCED IN THE PAST THREE YEARS, SIR PIERS SAID

ACCOUNTING ARRANGEMENTS WHICH STARTED IN 1988 ENABLED THE GOVERNMENT, MORB PARTICULARLY THE MONETARY AFFAIRS BRANCH, TO INFLUENCE THE INTERBANK LIQUIDITY AND INTERBANK INTEREST RATES EFFECTIVELY.

LEVEL OF

BANKING

"IT

THE IS NOW THE ULTIMATE PROVIDER OF LIQUIDITY TO SYSTEM. IN THIS RESPECT THE BRANCH PLAYS THE SAME ROLE AS THAT OF A CENTRAL BANK OR MONETARY AUTHORITY IN SOME OTHER TERRITORIES'.

HE WENT ON TO POINT OUT THAT THE GOVERNMENT INFLUENCE ON INTERBANK CONDITIONS THROUGH THE ACCOUNTING ONLY SPARINGLY.

H

EXERCISED ITS

ARRANGEMENTS

"THE INTERBANK MARKET IS OTHERWISE LEFT VERY MUCH ALONE.

DO

LEVEL THE

OF AND

"WHEN WE

INCREASE INTERVENE TO REDUCE OR INTERBANK LIQUIDITY, THERE IS ON ALL OCCASIONS TOTAL TRANSPARENCY CLARITY OF PURPOSE.

OBJECTIVE

TO WHICH ARE AT AROUND

IS

"IN MOST CASES WHEN WE INTERVENE OUR PRIMB ENSURE THAT INTERBANK INTEREST RATES ARE AT LEVELS CONSISTENT WITH THE MAINTENANCE OF A STABLE EXCHANGE RATE 7.80," HE SAID.

TO

DEVELOPMENT THE

OF

BILLS MARKET THE EXCHANGE FUND

FOR RESPONSE

THE NEED FOR A WIDER RANGE OF INSTRUMENTS OPERATIONS, IF ONLY FOR THE PURPOSE OF PROPERLY MANAGING ASSOCIATED RISKS AND ENSURING GREATER COST EFFECTIVENESS.

WAS MONETARY

IN

THE

"THE

IN STARTED PROGRAM FOR THE ISSUE OF EXCHANGE FUND BILLS MARCH THIS YEAR.

MAKERS AND THANKS TO THE SUPPORT OF THE MARKET RECOGNISED DEALERS, WE NOW HAVE AN INTERESTING MARKET WITH ENCOURAGING POTENTIAL.

/"ALL ISSUES