ENG-1973 — Page 73

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FINANCIAL STRUCTURE

sterling automatically bringing about equivalent rises and falls in the value of the Hong Kong dollar.

When the US dollar was devalued again by 10 per cent on February 13, 1973, the Hong Kong dollar's gold parity was unchanged and a new rate of HK$5.085 to US$1 was fixed.

When the Sterling Guarantee Agreement came to an end on September 24, 1973 the British Government made a unilateral offer for a further guarantee for a period of six months ending March 31, 1974. Hong Kong is participating in the arrangements made under the offer.

At the same time as sterling started floating in June 1972, the sterling area disbanded, with the exception of the British Isles. From January 1, 1973, all Exchange Control Regulations in Hong Kong were rescinded and the banks no longer had any restraints on their foreign currency transactions. Furthermore, after September 24, 1973, they became free to invest their external assets in any currency.

Banking

Due largely to additional lending by the banks, deposits increased during January 1973 by 10 per cent to $27,151 million. However, they decreased during the following four months to $24,282 million at the end of May, and then increased to $26,191 million by December 31-a net increase of six per cent over the previous year-end figure.

Loans and advances increased during 1973 by 31 per cent to reach $23,263 million at December 31.

At the end of 1973 there were 74 licensed banks in Hong Kong with a total of 543 banking offices, an increase of 65 banking offices during the year. In addition, there were 50 representative offices of foreign banks. Banks in Hong Kong have branches and correspondents throughout the world and offer a comprehensive service of the highest order.

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Monthly bank clearings averaged $38,655 million. Banking statistics for the past three years are shown in Appendix 11.

Stock Exchanges

There were four stock exchanges engaged in active trading in Hong Kong at the end of 1973, although seven remained incorporated under the provisions of the Companies Ordinance. During the year, the total turnover reported by the stock exchanges was valued at $48,217.38 million, an increase of 10.2 per cent over the previous year's figure.

A Securities Advisory Council and a post of Commissioner for Securities were established in January 1973, without statutory power, to help prepare the way for the statutory provisions likely to be imposed later.