Hong Kong maintains a three-tier banking system of deposit-taking institutions, comprising licensed banks, restricted licence banks, and deposit-taking companies, they are collectively known as authorized institutions. Subject to the provisions of the Banking Ordinance, authorized institutions can be registered in Hong Kong or operate as branches of foreign banks in Hong Kong.
Operate current and savings accounts, accept deposits of any size and maturity from the public, and collect cheques drawn by or paid in by customers.
Principally engaged in merchant banking and capital market activities, and may take deposits of any maturity of HK$500,000 and above.
Mostly owned by, or otherwise associated with banks; mainly engage in a range of specialised activities such as consumer finance and securities business; may take deposits of HK$100,000 or above with an original term of maturity of at least three months.
The Hong Kong Monetary Authority (HKMA) is responsible for maintaining the stability of the currency and banking system and is accountable to the public through the Financial Secretary. Its functions are set out in the Exchange Fund Ordinance and the Banking Ordinance. The Banking Ordinance provides the legal framework for banking supervision in Hong Kong, stating that the principal function of the Monetary Authority (MA) is to “promote the general stability and effective working of the banking system”. In this regard, the HKMA is responsible for regulating and supervising Hong Kong's banking business and deposit-taking business, as well as the authorization of the above-mentioned authorized institutions.
Besides, the functions of the HKMA include:
This is defined as maintaining a stable external exchange value of Hong Kong’s currency, in terms of its exchange rate against the US dollar, at around HK$7.80 to US$1.The Monetary Base is required to be at least 100% backed by US dollar reserves held in the Exchange Fund, and changes in the Monetary Base to be 100% matched by corresponding changes in US dollar reserves.
Its main duties include:
Under the delegated authority of the Financial Secretary (FS) and within the terms of the delegation, HKMA is responsible to the FS for the use and investment management of the Exchange Fund. According to the Exchange Fund Ordinance, the main purpose of the Fund is to affect, either directly or indirectly, the exchange value of Hong Kong’s currency, it also helps to maintain the stability and integrity of the financial system of Hong Kong.
Little Thrifty won a scholarship of $10,000 from an international competition, and would like to open a savings account and save the money for future study. He noted that under the three-tier banking system in Hong Kong, only licensed banks accept deposits of any size from the public, while restricted licence banks and deposit-taking companies don’t accept deposits of small amount.
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