ENG-2010 — Page 125

Financial and Monetary Affairs 83

$500,000 or above. Deposit-taking companies may take deposits of $100,000 or above with an original maturity of at least three months.

Hong Kong has one of the highest concentrations of banking institutions in the world. At the end of 2010, there were 146 licensed banks, 21 restricted licence banks and 26 deposit-taking companies. These 193 Als maintained a network of more than 1 400 local branches. There were also 67 representative offices of overseas banks in Hong Kong at year's end.

The total deposit liabilities of all Als to customers and the total loans and advances extended by these institutions at the end of 2010 were $6,862.2 billion and $4,227.3 billion respectively. The total assets of all Als amounted to $12,296.5 billion.

Hong Kong Monetary Authority

The HKMA was established on April 1, 1993 after the Legislative Council had passed amendments to the Exchange Fund Ordinance in 1992 empowering the Financial Secretary to appoint a Monetary Authority.

The HKMA's policy objectives are to maintain currency stability within the framework of the Linked Exchange Rate system through sound management of the Exchange Fund, monetary policy operations and other means deemed necessary; to promote safety and stability of the banking system through the regulation of banking business, the business of taking deposits and the supervision of Als; and to promote efficiency, integrity and development of the financial system, particularly payment and settlement arrangements.

The HKMA is an integral part of the Government, but can employ staff on terms that differ from those of the civil service to attract personnel of the appropriate experience and expertise. Its staff and operating costs are charged directly to the Exchange Fund instead of the General Revenue. The HKMA is accountable to the Financial Secretary, who is advised by the Exchange Fund Advisory Committee (EFAC) on investment policies and strategies for the Exchange Fund and on projects that are charged to the Exchange Fund, such as the development of financial infrastructure.

The Banking Advisory Committee and the Deposit-taking Companies Advisory Committee are established under the Banking Ordinance to give advice on relevant policy matters. They are chaired by the Financial Secretary and comprise members from the banking industry and other professions.

The Banking Ordinance provides the legal framework for banking supervision in Hong Kong. Under the ordinance, the HKMA is the licensing authority responsible for granting and revoking the authorisation of all Als, and the approval and revocation of money broker licences. The HKMA seeks to maintain a regulatory framework that is fully in line with international standards. The aim is to devise a prudential supervisory system to help preserve the general stability and effective operation of the banking system, while at the same time providing sufficient flexibility for Als to make commercial decisions.