TNAG-1649-FCO40-2296-Hong-Kong-Commissioner-of-Banking-s-annual-report-for-1986--1987 — Page 71

is important that the Commissioner should develop

the same sort of relations with the People's Bank as

he enjoys with other supervisory authorities such as

the Federal Reserve, the Bank of Japan and the Bank

of England. This relationship is essential on day to day matters, about problems which may arise and particularly regarding any further entries into the

Hong Kong market.

50.

the

an

Three other factors will affect

supervisory role in Hong Kong. The first is the

agreement reached at the end of the year between the

United States authorities and the Bank of England

regarding the assessment of capital adequacy and

the establishment of minimum capital standards on

international basis. Although important in itself,

it will be of even greater significance if the

agreement is extended to other authorities and, in

particular, Japan. Hong Kong's standards will be examined in the light of the agreement. The second

factor is the development of "off-shore" banking and

implications for Hong Kong as a financial centre.

The third factor embraces part of the second,

namely, the relationship between securities' trading

and banking where new market boundaries are being

established and where the new market is interbank

rather than stock exchange based.

51.

All three factors impact on the existing

three-tier system. More deposit-taking institutions

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