TNAG-1270-FCO40-1620-Financial-policy-in-Hong-Kong-1983 — Page 235

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4 Foreign Currency Notes

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There is an active market in foreign currency notes in Hong Kong, in certain specialised sectors of the economy eg retailers catering

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for tourists - a substantial (but unquantifiable) proportion of business is conducted in foreign currency notes. Indeed such notes are acceptable tender (although not strictly legal tender) in many parts of the territory, particularly when the exchange value of the local currency is under pressure.

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Youde's toho 11 120 Spt for a statint let there is mine which came by word to make tomactions in freign entro illegal.

Foreign Currency Clearing Accounts

There is a substantial (but again unquantifiable) number of manufacturing and import/export enterprises in Hong Kong operating effectively on a US$ basis, with their books maintained in that currency, and the local currency used merely for local wages, rates etc. There is no foreign currency clearing mechanism in Hong Kong; transactions between these companies (which clearly have an impact on the local economy) have to be settled by payments drawn on their US$ accounts, which may be with banks in Hong Kong, in Singapore, in New York or elsewhere (and the banks outside Hong Kong may or may not be branches of Hong Kong-incorporated banks).

II

Means of Control

1

HK$ Notes

The Government could limit the growth in the circulation of HK$ notes by restricting the issue of HKGEF Certificates of Indebtedness..

Quite

*The local community is very aware of daily financial matters, through widespread Chinese language radio and press coverage. But this awareness is sometimes very unsophisticated: hence the "bank rung" 1965 and 1967.

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