hong kong banking system group 2. group member list lee tsz ho, kenneth 053174 ip wing chi, joyce...
TRANSCRIPT
Hong Kong Banking System
Group 2
Group Member List
Lee Tsz Ho, Kenneth 053174
Ip Wing Chi, Joyce 053161
Chan Shing Yip, Thomas 053230
Leung Yuen Yan, Kathy 053183
Li Piu Nam, Bill 053162
What is the Central Bank in Hong Kong?
The answer is Hong Kong Monetary Authority.
Content
Introduction of Hong Kong Monetary Authority (HKMA)
Comparison
~ HKMA vs. European Central Bank
~ HKMA vs. Bank of Japan
~ HKMA vs. Bank of England Conclusion
Introduction of HKMA
Introduction to HKMA
established on 1 April 1993by merging the Office of the Exchange
Fund with the Office of the Commissioner of Banking
Main functions of HKMA
keeping the Hong Kong dollar stable managing the Exchange Fund promoting the safety of Hong Kong's
banking system developing Hong Kong's financial
infrastructure to enable money to flow smoothly, freely and without obstruction
The HKMA's policy objectives
to maintain currency stability to promote the safety and stability of
the banking system to enhance the efficiency, integrity
and development of the financial system
Supervision of liquidity
Basle Committee on Banking Supervision
maintain adequate liquidity and capital adequacy ratios
Minimum monthly average liquidity ratio of 25%.
Banknotes
issued by the three note-issuing banks– BOC, HSBC, Standard Chartered
required to submit US dollars (at HK$7.80=US$1) to the HKMA
Hong Kong dollar banknotes are fully backed by US dollars held by the Exchange Fund
Coins and Ten dollars banknotes
issued by the Government through the HKMA
settled against US dollars at the rate of HK$7.80 to one US dollar
fully backed by US dollars
Comparison
HKMA and the Central Bank in Different Countries
Comparison
They are …
~ European Central Bank (ECB)
~ Bank of Japan (BOJ)
~ Bank of England (BOE)
Comparison
HKMA and ECB
Comparison between HKMA and ECB
Similarity
~ Aim : to maintain the price stability
~ Supervision of liquidity ( 監察流動資金
充足程度 )
Comparison between HKMA and ECB
Difference
~Copyright of banknotes and coins
European Central Bank
Hong Kong Monetary Authority
Copyright of Banknotes
Copyright of Coins
And ten dollars banknotes
Hong Kong Banknotes
European Banknotes
Comparison
HKMA and BOJ
Attributes / Name HKMA BOJ
Main decision in monetary policies?
Main aim as keeping the price?
Use Open Market Operation?
Main executing organization?
Responsible to supervise and monitor commercial bank?
Issuing all currency within its region?
Government bank?
Responsible for clearing?
Background of Bank Of Japan
Central bank of Japan Juridical person established based on the Bank
of Japan Law Not a private corporation Consists of 3 parts:
– The Policy Board – Bank Executives– Departments, Branches, Local Offices in
Japan, and Overseas Representative Offices
Decision making
Basic stance for monetary policy is decided by the Policy Board at Monetary Policy Meetings (MPM)
the Policy Board:– Discusses economic and financial situation– decides the guideline for money market
operations– announces decisions immediately after the
meeting
Open Market Operation
Monetary policy that involves the buy and sell of securities
influences the volume of money:– By buying and selling Japanese
Government securities (JCG) mainly.
Objectives
Main aim:– maintain the price stability as it provides the
foundation for the nation's economic activity. – The Bank of Japan Law states that the
objectives should be "aimed at, through the pursuit of price stability, contributing to the sound development of the national economy."
Duty
monitor commercial banks and supervised their activity to provide a good business environment
Currency issued
Issuing all of its region’s currency including– 10,000yen, 5,000yen, 2,000yen, 1,000yen
bank notes– 500yen Nickel-brass, 100yen Cupro-nickel,
50yen Cupro-nickel, 10yen Bronze, 5yen Brass and 1yen Aluminum Coin
– Japanese Government Securities
Role
acts as the government bank:– such as treasury funds and Japanese
government securities (JGS) services. The Bank accepts deposits (treasury funds) from the government as government deposits
Clearing
three clearing systems:– the Zengin Data Telecommunication System
(retail credit transfers) – the Foreign Exchange Yen Clearing System (FXY
CS)(mainly yen legs of foreign exchange transactions)
– bill and cheque clearing systems (BCCSs)(bills and cheques collected at regional clearing houses)
Comparison
Bank of England and HKMA
Bank of England
Central Bank of : United Kingdom
Established in : 1694 Headquarters : London Current Inflation : 3.1%
(next due : 15thMay,07) Inflation Target : 2.0%
Resource: http://en.wikipedia.org/wiki/Bank_of_england
Bank of England
Comparison -- SimilaritySame main objective
•Bank of England :
•the bank is committed to promoting and maintaining monetary and financial stability as its contribution to a healthy economy
•HKMA : •the HKMA is the government authority in Hong Kong responsible for maintaining monetary and banking stability
Comparison -- Similarity
Bank of England : debate on issues
relating to the international financial architecture
The HKMA : effectively measure and
report on the risks of major functions, products or business activities
Cautious general risk management policy
Comparison -- Difference
Bank of England : takes a role as a
central bank considers risks
across the system as a whole
The HKMA : is the government
authority in Hong Kong
but not taking the role as the central bank
Role as central bank
Comparison -- Difference
Bank of England : has the power to give
instructions to the bank on interest rates for a limited period
has to meet the inflation target by setting an interest rate
The HKMA : no right to set the
interest rate and inflation target
is primarily determined by the Fed to suit the US
Control the interest rate
Comparison -- Difference
Bank of England : has been issuing
banknotes for over 300 years
gaining and maintaining public confidence in the currency is a key role
The HKMA : does not own the right to
issue banknotes
(except $10 banknotes) but the copyright of coins is
handed by HKMA
Copyright of banknotes
Conclusion
Which monetary system works better out of the above comparison?
Conclusion
The aims of the four central banks are most likely the same
Similar supervision approach on banking system by risk management
Main difference is the issue of notes and coins
Enjoy the highest degree of freedom– Not controlled by the government
An independent authority
– Will not be easily influenced by the government– Report to the public directly
What HKMA Wins
Promotes free market– Let the interest rate flow– Rarely interfere the market
What HKMA Wins (Cont’d)
Our Suggestions
Focus more on the business morals of the banks
Prevent discriminations– E.g. Serving the rich only
Develop a fine supervisory system over the e-banking
Prevent counterfeit money
Reference (Cont’d)
Books: T.Y. Choi, Eric F.K. Chiu (1994) Hong Kong Banking System a
nd Practice. The Chartered Institute of Bankers, HK. T.K. Ghose (1995) The Banking System of Hong Kong. Butterw
orth. Study Group of the Chinese Banks’ Association (1988) Hong K
ong’s Banking System in Transition: Problems, Prospects, and Policies. Asian Research Service
Chen Jianhua (1998) Hong Kong Finance Development in the Future. Guo Shiping. (P.27-31)
Reference
The Hong Kong Monetary Authority Homepage http://www.hkma.com Bank of Europe Homepage http://www.ecb.int/mopo/intro/html/operational.en.html The Bank of England Homepage http://www.bankofengland.co.uk The Bank of Japan http://www.boj.or.jp/ Profiles of Hong Kong Major Service Industries (Banking) http://www.toletrade.com/main/si/spbank.htm Economic Forum (3, Feb, 2005, “A to Z of Money and Banking”) http://www.tdctrade.com/econforum/hkma/hkma050201.htm Economic Forum (22, April, 2004, “Sharing Credit Information”) http://www.tdctrade.com/econforum/hkma/hkma040404.htm
Reference (Cont’d)
Journal, Magazine, Newspaper, and others Speech by the Chief Executive of HKMA (Fri, 20-10-2006) <<One Country, Two financial systems>> Speech by Executive Director (Banking Policy), (7 September 2006) Simon Topping
<< Enhancing disclosure by Hong Kong banks>> SCMP by Louis Beckerling (10-5-2006) <<Size matters for lenders wanting to stay on top>> SCMP by Tvonne Liu (23-8-2006) <<Demand soars for Central office space>> SCMP by Louis Beckering (15-12-2005) <<Sweeteners for deposits could turn sour>> Journal of Economic Issues by Forder, James <<Why Is Central Bank Independence So Widely Approved? >> Journal of Post Keynesian Economics by Fontana, Giuseppe <<The Federal Reserve and the European Central Bank: a theoretical comparison of their l
egislative mandates>> Speech by Andrew Sheng of Deputy Chief Executive Hong Kong Monetary Authority <<Financial Regulation>>
~END~Thankyou!!