HONG KONG MONETARY AUTHORITY Annual Report 1996
HONG KONG MONETARY AUTHORITY
MODERNISATION OF LEGAL FRAMEWORK
In addition to the above monetary reforms, the HKMA has taken the necessary legislative steps to adapt and localise the ordinances in the monetary and banking fields to make them fully consistent with the Joint Declaration and the Basic Law, and to modernise their provisions to keep pace with the developments in the monetary and financial system. These included the amendments to the Exchange Fund Ordinance in 1992 and 1995, the localisation of the Hong Kong (Coinage) Orders in 1994 as well as the amendments to the Bank Notes Issue Ordinance in 1995 (see box below).
MODERNISATION OF LEGAL FRAMEWORK
Exchange Fund (Amendment) Ordinance 1992 and 1995
- Appointment of the Monetary Authority by the Financial Secretary.
- Empowers the Financial Secretary to use the Exchange Fund to maintain the stability and integrity of the monetary and financial systems of Hong Kong.
- Provides statutory backing for the introduction of the new interbank payment system.
- Clarifies the investment ambit of the Exchange Fund so that new financial products approved by the Exchange Fund Advisory Committee may be used for the prudent management of the Fund.
- Transfers certain powers of the UK Secretary of State over the Exchange Fund to the Financial Secretary.
The Coinage Ordinance 1994
- In line with the provisions in the Basic Law, the Hong Kong (Coinage) Orders was revocated while the Coinage Ordinance was enacted in 1994.
- The Ordinance empowers the Government to issue legal tender coins, which previously required the approval of the UK Secretary of State.
- The Ordinance also deals with the demonetization of the one-cent notes.
The Bank Notes Issue (Amendment) Ordinance 1995
In line with the relevant provisions in the Basic Law, the Ordinance empowers the Government to:
- issue currency notes;
- extend the backing mechanism to such currency notes;
- authorise banks to issue or continue to issue currency notes;
- control matters such as banknote design, denomination, safe custody etc.