EXCHANGE FUND ORDINANCE

EXCHANGE FUND ORDINANCE

LAWS OF HONG KONG

EXCHANGE FUND ORDINANCE

CHAPTER 66





CHAPTER 66

EXCHANGE FUND

Tomake provision for the establishment and management of an
exchange fund and as to the employment of its assets in Hong
Kong. (Amended, 20 of 1948, s. 4 and 17 of 1979, s. 2)

[6 December 1935.]

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

(Amended, 20 of 1948, s. 4)

2. In this Ordinance, unless the context otherwise requires

'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 Corporatoin Limited Ordinance
and the charter of incorporation of Standard Chartered Bank or
any supplemental charter of that bank, or issued in accordance
with the above-mentioned provisions as modified by this Ordin-
ance, or the Bank Notes Issue Ordinance; (Amended, 20 of
1948, s. 4; 54 of 1956, s. 3; 7 of 1978, s. 3 and 76 of 1984, s. 2)

'foreign exchange' means all currencies other than Hong Kong
currency and includes sterling and other Commonwealth
currencies; (Amended, 20 of 1948, s. 4)

'note-issuing bank' means Standard Chartered Bank nd The Hongkong
and Shanghai Banking Corporation Limited (Amended, 54 of 1956, s. 3; 14
of 1958, s. 3; 7 of 1978, s! 3 and 76 of 1984,s.2)

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 such purposes as the Financial Secretary thinks fit
affecting, either directly or indirectly the exchange value of the currency
of Hong Kong and for other purposes incidental thereto. 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. (Amended,
12 of 1946, s. 2 and 26 of 1983, s. 2)

(2) The Fund, or any part of it, may be held in Hong Kong currency
or in foreign exchange 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 such exchange or gold or silver or securities accordingly.
(Replaced, 25 of 1971, s. 2. Amended, 8 of 1975, s. 2 and 26 of 1983, s. 2)

(3) Subject to subsection (4), 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. (Added,
25 of 1971, s. 2. Amended, 26 of 1983, s. 2)

(3A) There shall be credited to the Fund the value of any coinage
issued under or by virtue of The Hong Kong (Coinage) Orders 1936 to
1978 and the value of any proceeds of sale of such coinage after it has
ceased to be legal tender. (Added, 26 of 1983, s.2)

(4) The aggregate amount of borrowing under subsection (3), other
than on certificates of indebtedness issued under section 4, outstanding
at any one time shall, subject to subsection (5), not exceed fifty thousand
million dollars, or, if held in foreign exchange, the equivalent at the
current rate of exchange. (Added, 25 of 1971, s. 2. Amended, L.N. 150171,
L.N. 125172, L.N. 56180, L.N. 173180, L.N. 363180, L.N. 388181 and L.N.
64187)

(5) The Legislative Council may from time to time, by resolution
proposed with the approval of the Secretary of State, determine some
other amount to be the amount which the aggregate amount of such
borrowings outstanding at any one time shall not exceed. (Added, 25 of
1971, s. 2. Amended, 16 of 1984, s. 2)

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 indebtedness in the form in the Schedule and to
require such bank to pay to him for the account of the Fund the face
value of such certificates, or the equivalent in such foreign exchange and
at such rate of exchange as may be determined by the Financial
Secretary, to be held by the Fund principally for the redemption of such
notes. (Replaced, 4 of 1951, Schedule. Amended, 26 of 1983, s. 3 and 16 of 1984,
s. 3)

(2) The Financial Secretary may employ the funds paid to him in
accordance with subsection (1), for the purchase of foreign exchange or
gold or otherwise in accordance with the provisions of section 3(2) or for
the redemption of certificates of indebtedness at their face value or the
equivalent in such foreign exchange and at such rate of exchange as may
be determined by the Financial Secretary.

(Replaced, 4 of 1951, Schedule.Amended, 16 of 1984, s. 3)





(3) The Financial Secretary may apply the proceeds of the sale of
foreign exchange or gold for Hong Kong currency in accordance with
section 3(2) to the redemption of certificates issued under subsection
(1). (Amended, 12 of 1946, s. 2)

4A. [Repealed, 64 of 1987, s. 311

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

(Replaced, 4 of 1951, Schedule. Amended, 7 of 1978, s. 3)

6. There shall be charged to the Fund-

(a)the emoluments payable to, and other staff costs relating to, the
persons employed in connection with the purposes of the
Fund, including the investment thereof, and also including any
appropriate share of such emoluments or staff costs in respect
of the services of public officers so employed as part of their
duties:

Provided that the number of appointments and the
emoluments of such staff have been approved by the
Financial Secretary; (Replaced, 26 of 1983, s. 4)

(aa) any expenses incurred in the issue and maintenance in
circulation of any coinage issued under or by virtue of The
Hong Kong (Coinage) Orders 1936 to 1978; and (Added, 26 of
1983, s. 4)

(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 connection
with the operation of the fund. (Replaced, 44 of 1936, s. 3.
Amended, 12 of 1946, s. 2 and 20 of 1948, s. 4)

7. The accounts of all transactions of the Fund shall be audited at
such times and in such manner as the Governor may from time to time
direct.

(Amended, 44 of 1936, s. 3 and 26 of 1983, s. 5)

8. The Financial Secretary may from time to time, after consultation
with the Exchange Fund Advisory Committee and with the approval of
the Secretary of State, transfer from the Fund to the general revenue of
the Colony or to such other funds of the Colony as may be authorized
by the Secretary of State any sum, or any part of any sum, in excess of
the amount required to maintain the assets of the Fund at 105 per cent of
the total of

(a)the aggregate of the borrowings made under section 3 and for
the time being outstanding; and





(b)the aggregate of the face value of the certificates of
indebtedness issued under section 4 and for the time being
outstanding,

and may for such purpose realize any of the assets of the Fund.

(Added, 6 of 1964, s. 2. Amended, 31 of 1968, s. 3)




SCHEDULE [s. 4(1).]


HONG KONG
EXCHANGE FUND ORDINANCE

(Chapter 66)

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

This certificate issued under the Exchange Fund Ordinance (Chapter 66)
represents indebtedness of the Hong Kong Government without interest to .............

for the amount of dollars .....................................................


and is redeemable at any time at the option of the Financial Secretary at its face
value
or the equivalent in such foreign exchange and at such rate of exchange as may be
determined by the Financial Secretary.

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

HONG KONG,

...................19 ..............................

Secretary for Monetary Affairs.

(Replaced, 26 of 1983, s. 6.Amended, 16 of 1984, s. 4)
Originally 54 of 1935. (Cap. 66, 1950 Ed.) 44 of 1936. 57 of 1936. 9 of 1937. 21 of 1939. 12 of 1946. 20 of 1948. 4 of 1951. 54 of 1956. 14 of 1958. 6 of 1964. 31 of 1968. 47 of 1968. 57 of 1970. 90 of 1970. 25 of 1971. L.N. 150/71. L.N. 125/72. 8 of 1975. 7 of 1978. 17 of 1979. L.N. 56/80. L.N. 173/80. L.N. 363/80. L.N. 388/81. 26 of 1983. 16 of 1984. 76 of 1984. 27 of 1986. L.N. 64/87. 64 of 1987. Short title. Interpretation. (Cap. 70.) (Cap. 65.) Establishment control and management of Exchange Fund. (App. III, p. AA 1.) Certificates of indebtedness. Schedule. Preservation of limits on note issue. Charges on Fund. (App. III, p. AA 1.) Audit of Fund. Transfer from the Fund.

Originally 54 of 1935. (Cap. 66, 1950 Ed.) 44 of 1936. 57 of 1936. 9 of 1937. 21 of 1939. 12 of 1946. 20 of 1948. 4 of 1951. 54 of 1956. 14 of 1958. 6 of 1964. 31 of 1968. 47 of 1968. 57 of 1970. 90 of 1970. 25 of 1971. L.N. 150/71. L.N. 125/72. 8 of 1975. 7 of 1978. 17 of 1979. L.N. 56/80. L.N. 173/80. L.N. 363/80. L.N. 388/81. 26 of 1983. 16 of 1984. 76 of 1984. 27 of 1986. L.N. 64/87. 64 of 1987. Short title. Interpretation. (Cap. 70.) (Cap. 65.) Establishment control and management of Exchange Fund. (App. III, p. AA 1.) Certificates of indebtedness. Schedule. Preservation of limits on note issue. Charges on Fund. (App. III, p. AA 1.) Audit of Fund. Transfer from the Fund.

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