EXCHANGE FUND ORDINANCE

EXCHANGE FUND ORDINANCE

CHAPTER 66.

EXCHANGE FUND ORDINANCE.

To make provision for the establishment and management
of an exchange fund.

[6th December, 1935.]

1. This Ordinance may be cited as the Exchange Fund
Ordinance.

2. In this Ordinance-

'bank notes lawfully issued' means notes issued in the Colony
by any, Of the note-issuing banks in accordance with the
provisions of The Hongkong and Shanghai Banking
Corporation Ordinance, the Mercantile Bank Note Issue
Ordinance, and the charter of incorporation of The
Chartered Bank of India, Australia and China or any
supplemental charter of that bank, or issued in accordance
with the above-mentioned provisions as modified by the
Currency Ordinance, 1935, or the Bank Notes Issue
Ordinance;

'foreign exchange' means all currencies other than Hong Kong
currency and includes sterling and other Commonwealth
currencies;

'note-issuing bank' means The Chartered Bank of India,
Australia aiid China, The Hongkong and Shanghai Banking
Corporation and the Mercantile Bank of India Limited.

3.(1) There shall be established a fund to be called

'the Exchange Fund' which shall be under the control
of the Financial Secretary and shall be used for the purpose
of regulating the exchange value of the currency of Hong
Kong. The control of the Financial Secretary shall be
exercised in consultation with an Exchange Fund Advisory
Committee of which the Financial Secretary shall be ex
officio chairman and of which the other members shall be
appointed by the Governor. [6(1)

(2) The Fund, or any part of it, may be held in Hong Kong
currency or in any other currency or in gold, or silver or may be
invested by the Financial Secretary in





securities approved by the Secretary of State; and the
Financial Secretary may for the account of the Fund buy
or sell such currency or gold or silver or securities accord-
ingly. Any such purchases or sales of currency shall be
for immediate delivery. The Financial Secretary may
borrow for the account of the Fund either in Hong Kong
or elsewhere on the security of any asset held by the Fund
or on the general revenue of the Colony: Provided that the
aggregate amount of borrowings, other than on certificates
of indebtedness issued under section 4, outstanding at any
one time shall not exceed thirty million dollars, or, if held
in foreign exchange, the equivalent at the current rate of
exchange. [6(4)

4. (1) The Financial Secretary is authorized to issue

to any note-issuing bank, to be held as cover for bank
notes lawfully issued in the Colony, certificates of indebted-
ness in the form in the Schedule and to require such bank
to pay to hirn for the account of the Fund the face value
of such certificates to be held by the Fund exclusively for
the redemption of such notes. 15(1)

(2) The Financial Secretary may employ the funds
paid to him in accordance with subsection (i), for the
purchase of foreign exchange or gold or otherwise in
accordance with the provisions of subsection (2) of section
3. [5(2)

(3) The Financial Secretary may apply the proceeds
of the sale of foreign exchance or gold for Hong Kong
currency in accordance with subsection (2) of section 3 to
the redemption of certificates issued under subsection (i)
hereof. [5(4)

5. Nothing in this Ordinance shall empower any note-issuing
bank to issue notes in excess of any maximum limit laid down in the
Ordinances or Charters governing the issue of such notes, and in
issuing certificates under this section the Financial Secretary shall take
into account such maximum limits.

6. There shall be charged to the Fund-

(a)expenses incidental to the remuneration, cost of passages
and superannuation in respect of officers





employed in connexion with the management of the
fund including any appropriate share of such expenses
in respect of the services of officer's of the
Government so employed as part of their duties :
Provided that the number of the appointments and the
rates of emoluments of such staff have been approved
by the Governor and the Secretary of State; and

(b) any incidental expenditure which the Governor
may approve as necessary for the due performance
of the duties laid upon the Financial Secretary and
the Advisory Committee in connexion with the
operation of the fund. [6(3)

7.The accounts of all transactions of the Fund shall

be audited at such times and in such manner as the Secre-
tary of State may from time to time direct. [6(4)

SCHEDULE. [s. 4(1).]

EXCHANGE FUND ORDINANCE (CHAPTER 66)

Certificate for Indebtedness for $ ...............

This certificate issued under the Exchange Fund Ordinance (Chapter 66 of
the Revised Edition) represents indebtedness of the

Hong Kong Government without interest to Bank

for the amount of .....dollars and is redeemable

at any time at the option of the, Financial Secretary.

This certificate may be held up to the above-mentioned amount as cover
for bank votes lawfully issued in the Colony.

. .

Financial Secretary.

HONG KONG,

, 195
54 of 1935 44 of 1936 57 of 1936 9 of 1937 21 of 1939 12 of 1946 4 of 1951 Short title. Interpretation. (Cap. 70.) (Cap. 71.) (54 of 1935.) (Cap. 65.) Establishment control and management of Exchange Fund. 44 of 1936, s. 3. [s. 3 cont.] Certificates of indebtedness. 4 of 1951 Schedule. Schedule. 4 of 1951, Schedule. Preservation of limits on note issue. 4 of 1951, Schedule. Charges on Fund. Audit of Fund. 44 of 1936, s. 4. 12 of 1946, s. 2.

54 of 1935 44 of 1936 57 of 1936 9 of 1937 21 of 1939 12 of 1946 4 of 1951 Short title. Interpretation. (Cap. 70.) (Cap. 71.) (54 of 1935.) (Cap. 65.) Establishment control and management of Exchange Fund. 44 of 1936, s. 3. [s. 3 cont.] Certificates of indebtedness. 4 of 1951 Schedule. Schedule. 4 of 1951, Schedule. Preservation of limits on note issue. 4 of 1951, Schedule. Charges on Fund. Audit of Fund. 44 of 1936, s. 4. 12 of 1946, s. 2.

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