CH4-Banking and Financial Systems-SV
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Transcript CH4-Banking and Financial Systems-SV
HKCEE Macroeconomics
Chapter 3: Banking and Financial
Systems
By Mr. LAU san-fat
CH3-Banking & Financial Systems
1
Function & Types of Banks
Banks act as financial intermediaries
that accept deposits and channel them
into productive investment.
Types of banks
Central bank
Commercial banks
Merchant banks
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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Functions of a Central Bank
1.
2.
3.
4.
5.
6.
Issuing note
Acting as the lender of last resort
Acting as the government banker
Acting as a clearing house
Supervising private banking activities
Carrying out monetary policies
via varying the discount rate
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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Central Bank Functions in HK
Lender of last resort
The Exchange Fund/HK Monetary Authority
Note-issuing
The Hong Kong and Shanghai Banking
Corporation Ltd., the Standard Chartered
Bank, the Bank of China, and the Hong
Kong Monetary Authority.
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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Central Bank Functions in HK
Government bank
The Hong Kong and Shanghai Banking
Corporation Ltd. & the Bank of China
The Treasury
The Hong Kong Monetary Authority
Bank of central clearance
The Hong Kong Interbank Clearing Ltd.
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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Central Bank Functions in HK
Banking supervision
The Hong Kong Monetary Authority
Execution of monetary policies
Since the abolition of the interest rate
agreement among banks, monetary
policies in HK are restricted.
The HK Monetary Authority could mainly
aim at stabilizing the exchange rate &
maintaining the linked exchange rate
system.
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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Services of Commercial Banks
1. Taking deposits
Demand deposits, savings deposits, time
deposits & negotiable certificates of
deposits
2. Granting loans
Fixed loans and overdraft
3. Financing imports or export trade
By issuing letters of credit (L/C) &
discounting bills of exchange
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CH3-Banking & Financial Systems
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Services of Commercial Banks
4. Other services
Issuing gift cheques and cashier’s order
or bank draft
Providing credit cards & mortgage
Providing ATM machines services
Sending remittance overseas
Dealing in foreign currencies, gold &
shares
Offering insurance services
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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Services of Merchant Banks
1. Taking large-amount deposits from
companies & investors
2. Providing financial advisory service to
companies
3. Underwriting new shares after inviting
public subscription
4. Providing (retirement) fund
management services
5. Arranging syndicated loans
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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The Three-tier System of
Deposit-taking Institutions
1. Licensed banks (lb)
Examples: the Hong Kong and Shanghai
Banking Corporation Ltd., and the
Standard Chartered Bank
2. Restricted licensed banks (rlb)
Example: the Citicorp International Ltd.
3. Deposit-taking companies (dtc)
The JCG Finance Company Ltd.
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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The Three-tier System of
Deposit-taking Institutions
LB
Min. paid-up $150
capital
million
Types of
All types
deposits
Min. amount
of deposits
Maturity of
deposit
By Mr. LAU san-fat
Any
amount
Any
maturity
RLB
$100 million
DTC
$25 million
Time
deposits &
NCDs
$500 000
Time deposits
& NCDs
Any maturity
Min. 3 months
CH3-Banking & Financial Systems
$100 000
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Financial Markets in HK
Major financial markets:
1.
2.
3.
4.
5.
The
The
The
The
The
Money Market (short-term liquid assets)
Capital Market (shares & bonds)
Foreign Exchange Market
Futures Market
Gold Market
It is supervised by the Securities and
Futures Commission of Hong Kong with the
Securities and Futures Ordinance.
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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Factors Turning HK into an
International Financial Centre
1.
2.
3.
4.
5.
6.
Favourable geographical position
Favourable time zone location
Well-developed financial services
Advanced telecommunications facilities
Absence of exchange control
Favourable government policies (laissezfaire policy & low tax rates)
7. Increasing economic links with the Mainland
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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Contributions of a Financial
Centre to HK Economy
1. Speeding up economic growth
2. Increasing economic links with the
rest of the world
3. Increasing employment opportunities
By Mr. LAU san-fat
CH3-Banking & Financial Systems
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