XN000022-1995-02-10 — Page 5

3-

Introducing the background to the bill, a government spokesman said the three-tier structure of authorised institutions consisted of licensed banks, restricted licence banks and the deposit-taking companies.

"At present, each of them was licensed or registered by a different designated authority; that is the Governor-in-council, the Financial Secretary and the MA respectively.

"Powers to revoke and suspend also rested with respective designated authorities, except that the current legislation did not provide for suspension of a licensed bank," he said.

The spokesman explained that after a review of the licensing, suspension and revocation provisions, it was proposed to amend the ordinance to establish the MA as the authority responsible for the authorisation, suspension and revocation of all three types of authorised institutions; including new powers to suspend a licensed bank.

"The amendment would also improve the checks and balances in the authorisation arrangements by more clearly distinguishing the administrative and appellate functions and to improve the transparency in the authorisation arrangements by setting out more clearly the criteria which would be used for the authorisation and revocation of all three types of authorised institutions.

"The proposal for vesting full responsibilities for authorisation matters in the MA would be consistent with the practice of central banks in other leading financial centres and the MA's central banking role of maintaining the general stability of the banking system," he added.

On the transfer of powers from the Executive Council and the Financial Secretary to the MA, the spokesman said the proposed amendment would improve the checks and balances of the authorisation provisions in the ordinance.

r

1