ENG-2001 — Page 113

CHAPTER 5

Financial and Monetary Affairs

HONG KONG is a leading international financial centre with an integrated network of financial institutions and markets. The Government's policy is to maintain and develop an appropriate legal, regulatory, infrastructural and administrative framework with the aims of providing a level playing field for all market participants, maintaining the stability of the financial and monetary systems and enabling Hong Kong to compete effectively with other major financial centres.

Some of the achievements in 2001 are highlighted as follows:

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Hong Kong is the world's 10th largest banking centre and seventh largest centre for foreign exchange trading.

• Hong Kong's stock market is one of the world's largest in terms of market capitalisation and the third largest in Asia.

• The Hong Kong dollar debt market continued to grow in 2001. Outstanding Hong Kong dollar debt reached $494 billion at the end of the year, compared with $472 billion a year earlier.

Hong Kong as an International Financial Centre

A favourable geographical position, which bridges the time gap between North America and Europe, strong links with the Mainland and other economies in South- East Asia and excellent communications with the rest of the world, the high respect for the rule of law, a level playing field as well as a sound regulatory regime have helped Hong Kong develop into a leading international financial centre in the region. and the premier capital formation centre for the Mainland. The absence of any restrictions on capital flows into and out of Hong Kong is another important strength.

Hong Kong's financial markets are characterised by a high degree of liquidity. They operate under effective and transparent regulations, which meet international standards. A highly educated work force and ease of entry for professional staff from outside Hong Kong further contribute to the development of financial markets in Hong Kong.

Hong Kong has a very strong presence of international financial institutions. At the end of 2001, there were 133 foreign-owned banks. Of the world's top 100 banks, 76 have operations in Hong Kong, while 86 subsidiaries or related companies of foreign banks operate as restricted licence banks and deposit-taking companies. A further 111 foreign banks have local representative offices.

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