ENG-1964 — Page 54

CURRENCY AND BANKING

Bank note issue

Government $1 note issue

Government $1 coin issue

Subsidiary coins and notes

$1,296,486,225.00

$ 17,174,487.00

$

41,884,136.00 $ 43,946,565.00

41

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 modifi- cations made necessary by the position of Hong Kong as an entrepôt.

BANKING

The Banking Ordinance, 1948, 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 1964 88 licences had been approved and 50 banks were also authorized to deal in foreign exchange. Many of these banks have branches or correspondents throughout the world and are thus able to offer comprehensive banking facilities. There are at present 20 full members of the Clearing House which also act as agents for 49 sub-members. Monthly clearings-during the year averaged $3,489,637,860.96. Banking activities continued to expand; three new banks were licensed while some additional branches of existing banks were opened. The table at Appendix XII illustrates the rapidity of expansion between December 1955 and December 1964. Total deposits reached $6,568 million and at the same date, loans and advances to commerce and industry totalled $4,586 million.

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This expansion, and the difficulties in which one local bank found itself in 1961, led the Banking Advisory Committee to rec- ommend the revision of the Banking Ordinance to provide more adequately for the supervision of banking operations. Mr H. J. Tomkins of the Bank of England spent some time in Hong Kong in the early part of 1962. His report on the banking system, published in April 1962, contained a full discussion of the situation together with recommendations for a new banking ordinance. These were circulated to interested parties whose comments were considered by the Banking Advisory Committee before drafting began. A new bill to provide for the proper protection of the interests of depositors and for the adequate inspection of banks was read for the first