Banking Ordinance
| Banking Ordinance | |
|---|---|
 | |
| Legislative Council of Hong Kong | |
| |
| Citation | Cap. 155 |
| Passed by | Legislative Council of Hong Kong |
| Passed | 7 March 1986 |
| Commenced | 30 May 1986 |
| Legislative history | |
| Introduced by | Financial Secretary Sir John Henry Bremridge |
| First reading | 19 March 1986 |
| Second reading | 28 May 1986 |
| Third reading | 28 May 1986 |
| Amended by | |
| 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, 2000, 2001, 2002, 2003, 2004, 2005, 2005, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018[1] | |
| Status: Current legislation | |
The Banking Ordinance is a set of laws passed by the Legislative Council of Hong Kong to tighten restrictions for opening up or licensing a bank. Prior to the 1964 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 a Laissez-faire network, and was also described as "Free Banking" or "Wildcat Banking" filled with much uncertainty.
History
[edit]Banking Ordinance of 1948
[edit]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.[2] A Hong Kong dollar $5,000 license fee was required one-time. Afterwards, a bank could theoretically open on zero capital.[3]
Banking Ordinance of 1964
[edit]The law was passed on 16 October 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.[2]
Banking Ordinance of 1967
[edit]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.[4]
Hong Kong Association of Banks
[edit]The Hong Kong Association of Banks was established in 1981 as a network tag for banks that follow the ordinance rules.
Banking Ordinance of 1986
[edit]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.[5]
See also
[edit]References
[edit]- ^ "Enactment History of Cap. 155 Banking Ordinance". Cap. 155 Banking Ordinance. Retrieved 22 March 2018.
- ^ a b Jao YC. [2001] (2001). The Asian Financial Crisis and the Ordeal of Hong Kong. Quorum, Greenwood. ISBN 1-56720-447-3
- ^ Cato org. "Cato Org Archived 18 February 2007 at the Wayback Machine." Is Free banking more Prone to Bank Failures. Retrieved on 2007-02-23.
- ^ Masuyama, Seiichi. Vandenbrink, Donna. Yue Chia, Siow. [1999] (1999). East Asia's Financial Systems: Evolution & Crisis. Institute of Southeast Asian Studies Publishing. ISBN 981-230-005-8
- ^ Roebuck, Derek. [1994] (1994). Law Relating to Banking in Hong Kong. Hong Kong University Press. I SBN 9622093531