HONG KONG MONETARY AUTHORITY Annual Report 1996
HONG KONG MONETARY AUTHORITY
GROWTH IN MONEY SUPPLY
Along with the revival in consumer spending and active asset markets, the growth of Hong Kong dollar M1 accelerated from 2.2% in 1995 to 15.5% in 1996, with currency held by the public and demand deposits both increasing more rapidly during the year. Likewise, the growth of Hong Kong dollar M2 and Hong Kong dollar M3 also picked up, rising by 19.3% and 19% respectively. The faster growth in Hong Kong dollar M3 than that of the nominal GDP and domestic credit suggested a net inflow of capital. This is also supported by a continued rise in the foreign reserves of the Exchange Fund.
NOTES AND COINS
At end-1996, the total value of notes in circulation was $82,575 mn, an increase of 6.3% from a year earlier (Charts 6, 7, 8).
At end-1996, the total value of coins in circulation was $4,157mn (excluding commemorative gold coins and coin sets), an increase of 15.8% over end-1995 and representing about 4.8% (4.4% in 1995) of total currency in circulation (Charts 9, 10).
Coin replacement programme
By end-1996, about 506 mn pieces of Queen's Head design coins had been returned to the UK Royal Mint since the coin replacement programme started in 1993. Shipments to date covered all six denominations from $5 to 10¢. The returned coins are melted down into scrap metal and sold on the metal exchange market. Proceeds arising from the sales amounted to $10 mn in the year. For the $2 and $5 coins, the Bauhinia design now exceeds 80% of active circulation.The proportions of other Bauhinia design to Queen's Head design coins are also increasing as the programme continues.