ENG-1962 — Page 91

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CURRENCY AND BANKING

The Colony has been a part of the sterling area since August 1941. Exchange Control is administered under powers conferred by the Defence (Finance) Regulations, 1940. The system of control is based on that in force in the United Kingdom, with some modi- fications made necessary by the position of Hong Kong as an entrepôt.

BANKING

The Banking Ordinance provides that no institution may engage in banking without obtaining a licence from the Governor in Council and that each bank must publish an annual balance sheet. At the end of 1962, 92 licences had been approved, 46 banks being also authorized to deal in foreign exchange. A list of the latter is given in Appendix III. Many of these banks have branches or correspondents throughout the world and are thus able to offer comprehensive banking facilities. During the year the banks re- organized the clearing system to deal more effectively with the greatly increased volume of work. In this they were assisted by Mr R. F. Chatham, who for many years was the Chief Inspector of the London Clearing House. There are at present 16 full members of the Clearing House who also act as agents- for 52 sub-members. Monthly clearings during the year averaged $2,346 million. Banking activities continued to expand. Four new banks were licensed during the year, including a second hire-purchase finance company, while some 20 additional branches of existing banks were opened. The table at Appendix III shows the rapid expansion of banking between December 1955 and December 1962. Although the expansion is exaggerated to a certain extent by the increase in the number of reporting banks, the bias due to this factor is not important as banks are only included in the statistics when their deposits reach a significant amount. During the year consolidated statistics compiled from the quarterly returns submitted by all banks were published in the statistical supplement to the Government Gazette for the first time. At Appendix III is reproduced the table in respect of 31st December 1962. Total deposits had then reached $4,311 million, at the same date loans and advances to commerce and industry totalled $2,849 million.

The present Banking Ordinance, which was enacted in 1948, was not designed to provide for the supervision of banking operations. In view of the rapidity of the recent expansion, in particular of