- Banking Ordinance
Banking Ordinance are a set of laws passed by the
Legislative Council of Hong Kong to tighten restrictions for opening up or licensing a bank. Prior to the1964 re-regulations, the government had no way to control bank's monetary effect on the economy. It also had no way of protecting the people utilizing the institutions. Banking was considered aLaissez-faire network, and was also described as "Free Banking" or "Wildcat Banking" filled with much uncertainty.History
Banking Ordinance of 1948
The first law passed. It provided for the licensing of banks, examination of bank books, publication of bank statements and the appointment of an advisory committee [Jao YC. [2001] (2001). The Asian Financial Crisis and the Ordeal of Hong Kong. Quorum, Greenwood. ISBN 1567204473] . A
Hong Kong dollar $5,000 license fee was required one-time. Afterwards, a bank could theoretically open on zero capital [Cato org. " [http://www.cato.org/pubs/journal/cj16n1/cj16n1-3.pdf Cato Org] ." "Is Free banking more Prone to Bank Failures." Retrieved on2007-02-23 .] .Banking Ordinance of 1964
The law was passed on October 16, 1964 and advised by a group of senior officials from the
Bank of England . A minimum capital of HKD $5 million and liquidity ratio of 25% and limitation on loans and investments became the new requirements to open a legit institution [Jao YC. [2001] (2001). The Asian Financial Crisis and the Ordeal of Hong Kong. Quorum, Greenwood. ISBN 1567204473] .Banking Ordinance of 1967
The law was passed in response to a banking crisis in which a few banks experienced liquidity problems and 18 acquisitions by larger banks were recorded. The revised law set the new minimum capital to HKD $10 million. A
debt moratorium was imposed on new bank licenses [Masuyama, Seiichi. Vandenbrink, Donna. Yue Chia, Siow. [1999] (1999). East Asia's Financial Systems: Evolution & Crisis. Institute of Southeast Asian Studies Publishing. ISBN 9812300058] .Hong Kong Association of Banks
The
Hong Kong Association of Banks was established in1981 as a network tag for banks that follow the ordinance rules.Banking Ordinance of 1986
The law is an enhancement to the existing 1967 set. Changes were made to the provisioning of banks, adequacy of capital, control of the management of a bank. It also merged the "Deposit-taking Companies Ordinance" which also required a certain capital before banks can accept deposits [Roebuck, Derek. [1994] (1994}. Law Relating to Banking in Hong Kong. Hong Kong University Press. ISBN 9622093531] .
ee also
Exchange Bank Association References
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