TNAG-1641-FCO40-2288-Budget-of-Hong-Kong-1987 — Page 165

11.2.87

SECRET

15

29.

I do not want to stifle financial innovation;

our philosophy is to leave the market to develop on its

own with only the minimum amount of regulation necessary

to uphold its integrity. But the supervisor of authorised

institutions must also have regard to the interests of

depositors. The new Banking Ordinance has introduced

provisions which require adequate capital to support risk

assets on the books of authorised institutions. Although

these provisions have not yet come into effect, because it

was felt that a transitional period of around two years

would be required for adjustment, I hope that these

institutions are taking early action to capitalise

themselves adequately.

With luck, they will not then

catch that cold.

30.

The Banking Ordinance has now been in operation

for six months. So far all has gone smoothly.

But some

amendments to clarify the meaning of certain provisions

have been found necessary. These amendments are

undergoing the usual consultative process and, subject to

the advice of the Executive Council, I hope to introduce a

Bill within this session. In the meantime, the

SECRET

Page 165Page 166