The Hong Kong Monetary Authority (HKMA) announced today (30 May 2000) that the deregulation of Interest Rate Rules (IRRs) on time deposits with a maturity of less than 7 days and the prohibition on benefits for deposits (other than Hong Kong dollar savings and current accounts) will take effect on 3 July 2000.
"We have kept the economic and financial environment under review and have concluded that it is appropriate to proceed on schedule with the planned deregulation of interest rates. This view is shared by the Banking Advisory Committee, the Deposit-taking Companies Advisory Committee and the Exchange Fund Advisory Committee. Phase 1 of the deregulation will therefore take place as scheduled on 3 July 2000," said Mr David Carse, Deputy Chief Executive of the HKMA.
This is the first of a two-phased plan to deregulate the remaining IRRs in order to promote market liberalisation and enhance competition of the banking sector. It is also part of an overall programme to reform and further develop the banking system. Under the first phase of deregulation, the IRRs on time deposits with a maturity of less than 7 days and the prohibition on benefits for deposits (other than Hong Kong dollar savings and current accounts) will be lifted. The second phase, which will remove the IRRs on savings and current accounts, is scheduled to take place 12 months after the phase 1 liberalisation, subject to the prevailing economic and financial environment at the time.
In reviewing the current economic and financial environment, the HKMA has taken into account the following indicators:
"Although the first phase of the deregulation is relatively modest in itself, it brings the system one step closer to the complete liberalisation of interest rates in Hong Kong. The HKMA will continue to monitor closely the impact on the banks and developments in the market ahead of the final stage of deregulation due next year," Mr Carse added.
Attachment
An advanced copy of the article on the Deregulation of Interest Rate Rules, which will be published in the Quarterly Bulletin (May Issue) tomorrow, is attached with this press release.
For further enquiries, please contact:
Jasmin Fung, Manager (Press) at 2878 8246 or
Alice Lo, Manager (Press) at 2878 1843
Hong Kong Monetary Authority
30 May 2000