TNAG-1724-FCO40-2437-Minutes-and-Hansards-of-the-Legislative-Council-of-Hong-Kong-1988 — Page 189

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If, Sir, I could take the last part of the question first,

that is to say, why has this Council been bypassed by the

Government? Well, heaven forbid that we should ever

bypass this

this Council when the circumstances dictate that

matters should be brought to this Council. But of course

the Government in fact has not made these rules; the rules

have been made by the Hong Kong Association of Banks in

consultation with the Government and I do not think that

it would have been appropriate to bring these rules to the

Legislative Council.

Turning, Sir, to the first part of the question which

relates to where

to where the proceeds of negative interest rates

would be paido Mr. Lee asked whether the negative

interest would be paid to

paid to the Government and, if so, is

this payment not in the nature of a tax rather than a

banking charge. The charge is not in the nature of a tax,

Sir. The Specified Rate Rule made by the Hong Kong

Association of Banks in December applies to the clearing

balances of

of member banks. The rule contains a provision

which I am quoting: 'The management bank shall promptly

all amounts of interest

to charged pursuant

rules to the Financial Secretary as controller of the

Exchange Fund. This, Sir, is therefore not a

levy on banks. The rule was made by the committee of the

association who have decided that the interest charge

should be passed over to the Exchange Fund and I shall be

pay

these

dovernment

le.