Hong Kong Monetary Authority Annual Report 1997
CALENDAR OF EVENTS 1997
24 January
Hong Kong foreign currency assets held in the Exchange Fund as
at the end of December 1996 was US$63.8 bn, representing an
increase of 15% over US$55.4 bn at the end of 1995.
As part of the HKMA's on-going effort to increase transparency in
its operations, the HKMA also announced that the amount of foreign
currency assets would be released on a monthly basis starting from
1997.
27 January
A bilateral repurchase (repo) agreement in US Treasuries was signed between the Bank of Korea and the HKMA, the ninth such agreement with central banks/monetary authorities in the region.
27 January
The Executive Board of the IMF adopted a decision on the New Arrangements to Borrow (NAB). The HKMA would be one of the 25 participants in the NAB, with a share of the NAB credit line at around US$476 mn. Under the NAB, Hong Kong would be prepared to make loans to the IMF when additional resources were needed to cope with exceptional situations which may impair or pose a threat to the stability of the international monetary system.
28 January
The HKMA issued a letter to all AIs recommending that the maximum loan to value ratio for properties with a value of over $12 mn should not be higher than 60%.
14 February
To strengthen Hong Kong's status as an international financial centre beyond 1997 and increase overseas financial community's awareness of the investment potential of Hong Kong after the transition, Mr Joseph Yam, Chief Executive of the HKMA addressed three major conferences hosted by the Federal Reserve Bank of New York in New York, Bank of Japan in Tokyo and Dresdner Bank in Frankfurt in February and March.
26 February
The HKMA and the Authoridade Monetaria e Cambial de Macau (AMCM) signed a Memorandum of Understanding which aims at strengthening supervisory co-operation between the two regulatory authorities.
7 March
The HKMA and the IMF jointly organized the "Conference on Financial integration in Asia and the Role of Hong Kong? The conference discussed the key aspects of regional economic and financial integration and the challenges and opportunities of growing regional integration for Hong Kong.
20 March
The Financial Secretary as Chairman of the HKMC announced the appointment of the 15-member Board for the Corporation.
26 March
The LAF's Bid and Offer Rates were increased to 4.25% and 6.25% from 4% and 6% respectively. The following day, the HKAB announced a 25 bp increase in interest rates on retail deposits with maturities of less than seven days.
26 March
The HKMA and the Reserve Bank of New Zealand jointly announced that a repo agreement in US Treasuries had been signed. This was the HKMA's tenth repo agreement.
27 March
The HKMA announced the audited results of the Exchange Fund at end-1996 with total assets of the Fund up 16% to $534.5 bn (1995: $460.7 bn) and a 7.9% growth in accumulated earnings.
21 April
As a step towards closer bilateral relations between Australian and Hong Kong financial systems, the HKMA and the Reserve Bank of Australia (RBA) agreed that the CMU of the HKMA would become a member of RBA's Reserve Bank Information and Transfer System (RITS). CMU is the central clearing and settlement system for debt securities in Hong Kong and RITS is a similar system for Australian government debt securities.
23 April
The HKMA announced the launch of the Lantau Link Philatelic Numismatic Cover (PNC) which is issued, by the HKMA on behalf of the Government, to commemorate the opening of the Lantau Link. The Lantau Link PNC is Hong Kong's first PNC.
25 April
The HKMA issued a letter to all AIs reminding them the importance of a timely solution to the Year 2000 problem. The HKMA also announced its initiatives in ensuring Year 2000 compliance. AIs were required to submit their formal plans on Year 2000 compliance by 30 June 1997 and the HKMA expected that the Year 2000 compliant systems should be in place before 31 December 1998.
7, 11 May
The HKMA announced that a 1997 Commemorative Gold Coin and a set of seven specially designed coins (in proof quality) would be issued to mark the establishment of the HKSAR on 1 July 1997.
1 July
The Financial Secretary announced the composition of the Land Fund Advisory Committee of which he will be chairman. The Land Fund would be managed by the HKMA under the direction of this committee as a separate portfolio from the Exchange Fund beginning from 1 July 1997.
11 July
The Code of Banking Practice was issued jointly by the HKAB and the DTCA to further enhance the transparency and quality of banking services in Hong Kong. The Code covered relationship between banks and customers, opening and operation of accounts and loans, card services, payment services and debt collection.
24 July
The HKMA announced the unaudited results of the Exchange Fund at end-June 1997: total assets of the Fund stood at $569 bn (up 6.4% from end-1996) and accumulated surplus $181.9 bn (up 5.2% from end-1996).
11 August
A financing package organized by the IMF to assist Thailand in making economic adjustments was agreed in Tokyo. Hong Kong would participate through a loan of up to US$1 bn from the Exchange Fund.
21 August
The BIS had agreed to provide a short-term bridging facility to the Bank of Thailand to support Thailand's economic adjustments pending the drawdown of part of the IMF facility which was being arranged. As a member of the BIS, the HKMA had agreed to join the central banks/monetary authorities of the G-10 countries and other Asian and European economies in guaranteeing the bridging facility.
30 August
The HKMA issued a policy guideline on the supervisory approach
towards asset securitization and mortgage-backed securities (MBS),
which set out, among other things, the criteria for MBS to qualify
for a 50% risk weighting under the capital adequacy regime.
23-25 September
The 52nd Annual Meetings of the World Bank Group and the IMF were held successfully in Hong Kong. Top central bank and finance ministry officials from some 180 countries took part and the total number of participants exceeded 19,000, a record number. The Meetings reinforced Hong Kong's status as an international financial centre.
13 October
The Financial Secretary entered into agreement with the three note-issuing banks, namely Bank of China, The Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank, to sell to each of them 10% of the issued shares of Hong Kong Note Printing Limited.
16 October
The Airport Authority announced the signing of a $5 bn Note Issuance Programme arranged by the HKMA, under which the Airport Authority could issue notes with a denomination of $50,000 and maturities of up to 10 years
.
17 October
The HKMA issued a revised Guideline on Prevention of Money Laundering.
23 October
The HKMA issued a circular to remind banks that they should organize their Hong Kong dollar funding prudently and not be overly dependent on the LAF for last resort liquidity support otherwise penal LAF offer rates might be imposed on repeated borrowers. Due to the shortage in Hong Kong dollar in the money market as a result of speculative activities on the currency, the interbank interest rates fluctuated sharply during the day from 9% to 280% but closed at 7% the following day as the market stabilized. Overnight rates then stabilized within the LAF corridor of 4% to 7% in subsequent weeks.
23 October
Following consultations with the banking industry and the Hong Kong Society of Accountants, the HKMA issued a revised Best Practice Guide on Financial Disclosure by AIs.
25 October
In order to give more room for the overnight interbank interest rate to move to reflect conditions in the interbank market, the HKMA adjusted the Bid and Offer Rates under the LAF to 4% and 7% respectively. The corresponding rates before the adjustment were 4.25% and 6.25%.
7 November
The IMF gave a very positive assessment of Hong Kong's economic fundamentals and a firm and clear endorsement of the territory's economic policy framework. The assessment was made at the conclusion of an annual IMF consultation with Hong Kong.
7 November
The HKMC announced the purchase of its first block of mortgages from Asia Commercial Bank, Chase Manhattan Bank, First Pacific Bank and Shanghai Commercial Bank. The total size of the transaction was $650 mn.
1 December
HKMA's CMU launched a Securities Lending Programme for private sector debt securities. The Programme aimed to enhance the liquidity and settlement efficiency of CMU private sector debt securities, and increase their attractiveness to investors by enhancing the yields for the lenders.
3 December
The HKMA announced that agreement had been reached with the Shenzhen Branch of the People's Bank of China on a new Joint Clearing Facility to speed up the processing of Hong Kong dollar cheques issued by banks in Hong Kong and presented in Shenzhen.
19 December
Technical experts from central banks, monetary authorities and finance ministries of Australia; Canada; China; Hong Kong; France; Germany; Indonesia; Japan; Korea; Malaysia; New Zealand; the Philippines; Singapore; Thailand; the UK, the US and Vietnam met in Hong Kong to discuss the technical issues on the development of a liquid and deep East Asian debt market to assist regional financial intermediation. Representatives from Asian Development Bank; BIS; IMF; World Bank and technical experts from market participants also attended the meeting.