Exchange Fund Balance Sheet Data

The Hong Kong Monetary Authority (HKMA) released today (14 August 2000) key data on the balance sheet of the Exchange Fund at the end of July 2000, reporting an increase of HK$15.1 billion in the foreign assets of the Exchange Fund during the month.

Foreign assets, representing the external assets of the Exchange Fund, amounted to HK$738.4 billion at the end of July 2000. The increase in foreign assets was primarily due to an increase in the amount of repurchase agreements outstanding at the end of the month. Transactions in repurchase agreements are part of the routine investment activities of the Exchange Fund. (An explanation of the accounting effect of repurchase agreements on the balance sheet of the Exchange Fund is included in the attached Note.)

The Monetary Base, comprising Certificates of Indebtedness and coins issued, the Aggregate Balance of the banking system and Exchange Fund Bills and Notes issued, amounted to HK$207.6 billion.

Claims on the private sector in Hong Kong amounted to HK$53.8 billion.

The balance sheet data of the Exchange Fund are released in accordance with the International Monetary Fund's Special Data Dissemination Standard (SDDS) and are referred to as the Analytical Accounts of the Central Bank under SDDS (Annex 1).

At present, four press releases relating to the Exchange Fund's data are issued each month. Three of these releases are issued to disseminate monetary data in accordance with SDDS. The fourth press release, on the Exchange Fund's Abridged Balance Sheet and Currency Board Account, is made in accordance with the HKMA's policy of maintaining a high level of transparency. For the month of August, the scheduled dates for issuing the press releases are as follows:

Note:

Under a repurchase agreement ("repo"), the Exchange Fund sells securities to a counterparty and repurchases them at a pre-determined subsequent date and price. In accordance with generally accepted accounting policies, repo transactions are accounted for as secured borrowings, in which the cash received is accounted for as cash borrowed, against which a liability is recorded. The securities sold under repo agreements still remain as assets on the balance sheet. Therefore both the assets and liabilities of the balance sheet of the Exchange Fund are increased as a result of entering into repo transactions.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or

Caitlin Wong, Manager (Press), at 2878 1687

Hong Kong Monetary Authority

14 August 2000

Annex 1

Analytical Accounts of the Central Bank
(in millions of Hong Kong dollars)

(1) The Monetary Base comprises Certificates of Indebtedness (for backing the currency notes) and coins issued, the Aggregate Balance of the banking system and Exchange Fund Bills and Notes issued.

(2) Claims on the Hong Kong SAR Government refer to any lending to the Government.

(3) Claims on the Private Sector in Hong Kong include bank deposits and investments in debt securities issued by public sector entities in Hong Kong held by the Exchange Fund.

(4) Foreign Assets represent the external assets of the Exchange Fund and exclude foreign currency deposits placed with banks in Hong Kong.

(5) Foreign Liabilities include obligations under repurchase agreements and fees payable to the Exchange Fund's external managers.

Hong Kong Monetary Authority

14 August 2000