ENG-2019 — Page 99

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Financial and Monetary Affairs

At the end of 2019, the fund had total assets of $4,206.7 billion and an accumulated surplus of $748.7 billion3.

Another function related to the fund is currency issuance. Bank notes in denominations of $20, $50, $100, $500 and $1,000 are issued by three note-issuing banks: Bank of China (Hong Kong) Limited, the Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank (Hong Kong) Limited. These banks may issue currency notes only by surrendering non- interest-bearing USD backing at a fixed exchange rate of HK$7.80 to US$1. In 2018, the three banks launched a new series of Hong Kong banknotes incorporating advanced security features. The new $1,000 notes entered circulation in late 2018, followed by the $500 and $100 notes in 2019.

Through the HKMA, the government issues $10 currency notes and coins in denominations of $10, $5, $2, $1,50 cents, 20 cents and 10 cents. The value of all notes and coins in circulation at the end of 2019 was $530 billion.

The following sections set out the development of various sectors of financial services in 2019.

Banking and Payment System

Banking System

Hong Kong has a resilient banking sector, with healthy asset quality and strong liquidity and capital positions. The city was the world's sixth and Asia's second largest banking centre in terms of external positions, according to the Bank for International Settlements Quarterly Review for December 2019.

International financial institutions maintain a strong presence in Hong Kong. At the year end, 155 of the 164 licensed banks in Hong Kong were beneficially owned by parties outside Hong Kong and 78 of the world's top 100 banks operated in the city.

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 supervised by the HKMA.

The city has one of the world's highest concentrations of banking institutions. As at end-2019, there were 164 LBs, 17 RLBs and 13 DTCs. These 194 Als maintained a network of 1,262 local branches. There were also 43 representative offices of banks incorporated outside Hong Kong.

3 Foreign currency asset figures have been published monthly since January 1997 to demonstrate the government's continued commitment to greater openness and transparency. An abridged balance sheet of the Exchange Fund and a set of Currency Board accounts are also published monthly.

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Sum of liabilities to banks and non-bank customers outside Hong Kong and claims on banks and non-bank customers outside Hong Kong, such as equities, securities and capital instruments.

Only LBS may conduct full banking services, including 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.

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