statistics collected from banks (5),
these swap deposits grew by 24.4% during the first half of 1986. After adjusting for such deposits, Hong Kong dollar deposits grew by 3.9%.
3.5
Foreign currency deposits continued
to grow faster than Hong Kong dollar deposits. The higher interest rates offered for some foreign currency deposits compared with those for Hong Kong dollar deposits led some depositors to switch their Hong Kong dollar deposits into foreign currency deposits. The global weakness of the US dollar, which meant a depreciation of the Hong Kong dollar against currencies other
than the US dollar, and an expectation that this would
continue, also resulted in an increase in non-US dollar
foreign currency deposits.
3.6
Deposits (all currencies) with banks grew by 12.4%
during the first half of this year, while those with deposit-taking companies fell by 3.2%. In the first half of 1986, a number of registered deposit-taking companies applied voluntarily for revocation of their registrations. The number of registered deposit-taking companies
companies fell from 278 at the
end of 1985 to 266 at the end of June 1986.
/Negotiable
(5) The Monetary Affairs Branch has been collecting statistics on foreign currency swap deposits from all banks, starting from December 1984. Although the relative attraction of swap deposits was reduced by the abolition of interest withholding tax on Hong Kong dollar deposits in October 1983, there clearly continue to be occasions when the margin between market interest rates and the maximum deposit rates permitted by HKAB rules creates a significant incentive to place funds on a swap basis. It has long been recognised that
recognised that the existence of swap deposits may distort the underlying trend in the monetary statistics and hence render interpretation difficult. The availability of swap statistics should aid interpretation.
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