TNAG-1310-FCO40-1667-Future-of-Hong-Kong-1984 — Page 196

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HONG KONG LEGISLATIVE COUNCIL — 14 March 1984

Second reading of bills

15

EXCHANGE FUND (AMENDMENT) BILL 1984

THE FINANCIAL SECRETARY moved the second reading of:-‘A bill to amend the Exchange Fund Ordinance'.

He said: Sir, I move that the Exchange Fund (Amendment) Bill 1984 be read the second time. The main purpose of the Bill is to provide in explicit terms for payment and redemption in relation to certificates of indebtedness to be made in foreign exchange.

Since the introduction on 17 October 1983 of measures to stabilize the exchange value of the Hong Kong dollar certificates of indebtedness have been issued and redeemed against US dollars at a fixed rate of HK$7.80 to US$1. These certificates are issued to the note-issuing banks under section 4 of the Exchange Fund Ordinance and they are held by them as cover for their note issues. Prior to 17 October last such certificates were issued and redeemed against Hong Kong dollars. Although the new pricing arrangement are not expressly provided for in the Exchange Fund Ordinance, they are not considered to be contrary to the provisions of that Ordinance. Nevertheless, in order to remove any doubts it is proposed that subsections (1) and (2) of section 4 be amended so as to provide in explicit terms that issues and redemptions of certificates of indebtedness may be transacted not only in Hong Kong dollars but also in foreign exchange and at such a rate of exchange as may be determined by the Financial Secretary. For the avoidance of doubt, I should stress that the certificates will continue to be denominated in Hong Kong dollars.

The Bill also proposes that the Ordinance be amended by removing the unnecessary requirement under section 3(5) that resolutions in the Legislative Council to amend the Exchange Fund borrowing limit must be proposed by you, Sir.

These amendments require the approval of the Secretary of State, which has been obtained.

I move that the debate on this motion be now adjourned.

Motion made. That the debate on the second reading of the Bill be adjourned— THE FINANCIAL SECRETARY.

Question put and agreed to.

ARBITRATION (AMENDMENT) BILL 1984

THE ATTORNEY GENERAL moved the second reading of:-'A bill to amend the Arbitration Ordinance'.