HK_banking_-_regulatroy_framework.pptVIP

UIC Dr. Vincent Kwan Money and Banking  2011-2012 First semester PPT on Banking Industry in HK * * Financial Services Industry and Regulation in Hong Kong Why are banks regulated? Protecting your money or all depositors’ money in banks is an important reason that public wants regulators to monitor how banks operate. Failure in banks have greater adverse effects on the economy. Failure in an individual bank may cause trouble to another bank or banks - system-wide banking failures, and possibly contraction in money supply or in the economy. Existing banking regulatory system in HK is aimed at protecting the well-being of the market participants and the general public. HKMA - HKMA’s primary objectives in the area of banking supervision are to provide a measure of protection to depositors and to promote the stability and effective working of the banking system. HKMA also seeks to maintain an environment in which AI retain the ability to operate on a competitive and commercial basis. The three-tier financial system in Hong Kong First introduced in 1981, later revised in 1989. Bank crisis happened in the 1960s, Hong Kong Exchange Bank Association set up an Interest Rate Agreement IRA in July 1964. The HK Government set up the Hong Kong Association of Banks HKAB to replace the Hong Kong Exchange Banks Association in January 1981. All banks were then required to follow the Interest Rate Agreement set by HKAB. This IRA was completely phased out effective July 2001. IRA set the interest rate ceiling for bank deposits to avoid excess and unsafe competition among banks. Rapid economy growth in 1970s 1980s, Finance companies flourished. Deposit-taking Companies DTC Ordinance enacted in 1976. The government amended the legislation in 1981 to create the “three-tier financial system” to enhance the supervision of the deposit-taking companies. The three-tier system First version 1981 Licensed Banks, Licensed Deposit-taking Companies and Registered Deposit-taking