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Finally, the Bill seeks to recognise that a parent has an insurable interest in the life of his/her child. This is to rectify the anomaly recently identified by the insurance industry that juvenile policies, whereby a parent takes out insurance on the life of his/her child and naming the parent as a beneficiary, are illegal in Hong Kong, following the UK's common law. In addition, the Bill also recognises that a guardian has an insurable interest in the life of his/her ward to cater for the situation where the parents are deceased and the maintenance of a child depends upon the guardian.

Thank you, Mr President.

End

Exchange Fund

Following is a question by the Hon Fred Li and a reply by the Secretary for the Treasury, Mr KC Kwong, in the Legislative Council today (Wednesday):

Question:

Will the Administration inform this Council whether the recent proposal of the Hong Kong Monetary Authority to use a sum of HK$1 billion from the Exchange Fund for the purpose of establishing a Mortgage Corporation is in breach of section 3(1A) and 3(1B) of the Exchange Fund Ordinance; if not, whether there are any restrictions on the uses to which the Exchange Fund may be put?

Reply:

The use of the Exchange Fund to provide the initial capital for the establishment of the Mortgage Corporation is fully consistent with sections 3(1A) and 3(1B) of the Exchange Fund Ordinance. Section 3(1A) of the Ordinance provides that, in addition to using the Fund for its primary purpose, the Financial Secretary may, with a view to maintaining Hong Kong as an international financial centre, use the Fund as he thinks fit to maintain the stability and the integrity of the monetary and financial systems of Hong Kong. Section 3(1B) provides that the Financial Secretary, in using the Fund for the purpose specified in section 3(1A), shall have regard to the Fund's primary purpose of affecting the exchange rate of the Hong Kong dollar.