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The Financial Secretary, having consulted the Exchange Fund Advisory Committee, is of the view that the establishment of the Mortgage Corporation will be conducive to the maintenance of the stability and the integrity of Hong Kong's banking and monetary systems. The establishment of the Mortgage Corporation will improve banking stability by reducing the concentration and liquidity risks of mortgage lending. It will also reduce the maturity mismatch in mortgage lending by channelling long term savings to meet the rising demand for long term home financing. Furthermore, the establishment of the Mortgage Corporation will enhance the resilience of the monetary system to interest rate shocks by encouraging the origination of fixed rate mortgages, which will help to insulate borrowers from short- term interest rate fluctuations.

The proposed capital injection of $1 billion by the Exchange Fund to the Mortgage Corporation represents 0.2% of the total assets of the Fund. The Financial Secretary, having consulted the Exchange Fund Advisory Committee, is satisfied that the use of the Fund for the establishment of the Mortgage Corporation will not adversely affect the use of the Fund for its primary purpose of maintaining the stability of the exchange rate of the Hong Kong dollar.

The uses to which the Exchange Fund may be put are already specified in the various provisions of the Exchange Fund Ordinance. Under section 3(1), the control of the Fund by the Financial Secretary is exercised in consultation with the Exchange Fund Advisory Committee. In relation to the strategic purposes of the Fund, sections 3(1) and 3(1A) of the Ordinance require that the use of the Fund must serve either the primary purpose of affecting the exchange rate of the Hong Kong dollar or the secondary purpose of maintaining the stability and integrity of the monetary and financial systems of Hong Kong.

End

Financial resources declaration of CSSA recipients

Following is a question by the Hon Mrs Wong Chien Chi-lien and a reply by the acting Secretary for Health and Welfare, Mrs Doris Ho, in the Legislative Council today (Wednesday):

Question:

Will the Government inform this Council whether the children of elderly persons are required to declare that they cannot or will not support their parents before these elderly persons can receive assistance under the Comprehensive Social Security Assistance Scheme; if so, what the reasons are?