XN000022-1996-04-03 — Page 101

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Liaison group to review note issuing process

Following is a question by the Hon Andrew Cheng Kar-foo, Andrew, and a written reply by the Secretary for Financial Services, Mr Rafael Hui, in the Legislative Council today (Wednesday):

Question:

In his reply to my supplementary question raised at the Legislative Council sitting on 31 January 1996, the Secretary for Financial Services stated that the Government would consider the setting up of a standing liaison group to, constantly review the note issuing process as well as the process of minting coins. In this connection, will the Government inform this Council:

(a) whether it will expedite the implementation of the Bank Notes Issue

Ordinance passed recently;

(b)

of the timetable for setting up the proposed liaison group; and

(c)

of the composition and objectives of the proposed liaison group?

Reply:

(a)

(b)

The Bank Notes Issue (Amendment) Ordinance 1995 will be brought into effect as soon as the necessary preparatory work, which includes the drawing up of terms and conditions regarding bank note issues, is complete. These terms would cover such items as the design of notes, regular review of counterfeiting precautions, demagnetisation procedures, safe-keeping of unissued notes (e.g. location and type of vaults to be used), accounting procedures to record movements between issued and unissued stock and destruction procedures. These detailed and technical terms do require a fair amount of drafting and discussion with the note-issuing banks. The Hong Kong Monetary Authority (HKMA) has been discussing these terms with the note-issuing banks since the enactment of the amendment ordinance and agreement is expected to be reached with them later this year.

In connection with bank note issues, the HKMA has established two liaison committees, namely a HKMA-Police liaison group in January this year and the Bank Notes Issue Advisory Committee in March this year, to consider, inter alias, issues relating to the security and quality of the printing of bank notes and the enforcement of the provisions of the Bank Notes Issue (Amendment) Ordinance 1995.