ENG-2014 — Page 106

4

Financial and Monetary Affairs

further liberalisation?. The key liberalisation measures agreed on financial services cover the areas of accounting, insurance, securities and banking.

Banking Sector

Main Features

Hong Kong maintains three tiers of deposit-taking institutions: licensed banks (LBs), restricted licence banks (RLBs) and deposit-taking companies (DTCs). They are known collectively as 'authorised institutions' (Als) under the Banking Ordinance and are licensed by the HKMA.

Hong Kong has one of the highest concentrations of banking institutions in the world. At the end of 2014, there were 159 LBs, 21 RLBs and 23 DTCs. These 203 Als maintained a network of more than 1,370 local branches. There were also 63 representative offices of banks incorporated outside Hong Kong.

Hong Kong Monetary Authority

The HKMA's main functions 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 stability and integrity of the financial system, including the banking system; to help maintain Hong Kong's status as an international financial centre, including the maintenance and development of Hong Kong's financial infrastructure, and to manage the Exchange Fund.

The HKMA is an integral part of the government, but operates with a high degree of autonomy, complemented by a high degree of accountability and transparency, and can employ staff on terms that differ from those of the civil service to attract personnel of the appropriate experience and expertise. The HKMA is accountable to the Financial Secretary, who is advised by the Exchange Fund Advisory Committee in control of the Exchange Fund.

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.

7

8

9

Positive and negative listings are two approaches to trade liberalisation. Positive listing sets out the Mainland's liberalisation measures for Hong Kong, while measures in the negative list are reserved restrictive measures. Except for those reserved restrictive measures and the measures on standards management, the Mainland will not impose any particular restrictions on eligible Hong Kong service suppliers in the Guangdong Province in terms of market access requirement. In other words, it is 'permitted if not forbidden'

Only LBS may conduct full banking services, including in particular the provision of current and savings accounts and acceptance of deposits of any size and maturity. RLBS may take deposits of any maturity of $500,000 or above. DTCs may take deposits of $100,000 or above with an original maturity of at least three months.

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.

70