(CHAPTER 66)

(CHAPTER 66) Whole document: To make 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; 17 of 1979 s. 2) [6 December 1935] 1. Short title This Ordinance may be cited as the Exchange Fund Ordinance.

(Amended 20 of 1948 s. 4) 2. Interpretation 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 Corporation Limited Ordinance (Cap. 70) 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 Ordinance, or the Bank Notes Issue Ordinance (Cap. 65); (Amended 20 of 1948 s. 4; 54 of 1956 s. 3; 7 of 1978 s. 3; 76 of 1984 s. 2; L. N. 333 of 1989) "foreign exchange" means all currencies other than Hong Kong currency and includes sterling and other Commonwealth currencies; (Amended 20 of 1948 s. 4) "Monetary Authority" means the Monetary Authority appointed under section 5A; (Added 82 of 1992 s. 2) "note-issuing bank" means Standard Chartered Bank, and The Hongkong and Shanghai Banking Corporation Limited. (Amended 54 of 1956 s. 3; 14 of 1958 s. 3; 7 of 1978 s. 3; 76 of 1984 s. 2; L. N. 333 of 1989) 3. Establishment control and management of Exchange Fund (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 primarily 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 chairman and of which the other members shall be appointed by the Governor. (Amended 12 of 1946 s. 2; 26 of 1983 s. 2; 82 of 1992 s. 3) (1A) In addition to using the Fund for its primary purpose, the Financial Secretary may, with a view to maintaining Hong Kong as an international financial centre, use the Fund as he thinks fit to maintain the stability and the integrity of the monetary and financial systems of Hong Kong.

(Added 82 of 1992 s. 3) (1B) The Financial Secretary, in using the Fund for the purpose specified in subsection (1A), shall have regard to the primary purpose of the Fund.

(Added 82 of 1992 s. 3) (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; 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 (App.

III, p. AA1) 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. 150 of 1971; L. N. 125 of 1972; L. N. 56 of 1980; L. N. 173 of 1980; L. N. 363 of 1980; L. N. 388 of 1981; L. N. 64 of 1987) (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. Certificates of indebtedness (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. 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. 31) 5. Preservation of limits on note issue 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) 5A. Appointment of Monetary Authority (1) The Financial Secretary shall appoint a person to be the Monetary Authority on such terms and conditions as he thinks fit.

(2) The Monetary Authority shall- (a) assist the Financial Secretary in the performance of his functions under this Ordinance; (b) perform such functions as the Financial Secretary may direct; and (c) perform functions imposed on or assigned to the Monetary Authority by any other Ordinance.

(3) The Financial Secretary may appoint, on such terms and conditions as he thinks fit, persons to assist the Monetary Authority in the performance of the functions of the Monetary Authority specified in subsection (2).

(4) Notwithstanding subsection (2) (b) and (c), the Monetary Authority and persons appointed to assist him under subsection (3) shall be regarded, for all purposes, as employed in connection with the purposes of the Fund.

(5) In this section "functions" includes powers and duties.

(Added 82 of 1992 s. 4) 5B. Delegation to Monetary Authority (1) The Financial Secretary may delegate to the Monetary Authority the powers and duties conferred or imposed on the Financial Secretary under this Ordinance.

(2) A delegation or a subdelegation under this section- (a) shall not preclude the Financial Secretary from exercising the power or performing the duty; (b) may be conditional, qualified or limited as the Financial Secretary thinks fit; (c) may be to a person performing the functions of the Monetary Authority for the time being; and (d) may be amended by the Financial Secretary.

(3) The Financial Secretary may include in a delegation under this section power to subdelegate the powers and duties delegated on such terms and to such person or to any person of a class or description, as may be specified by him.

(Added 82 of 1992 s. 4) 6. Charges on Fund 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 (App. III, p. AA 1); 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; 20 of 1948 s. 4) 7. Audit of Fund 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; 26 of 1983 s. 5) 8. Transfer from the Fund 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) [S. 4 (1)] SCHEDULE HONGKONG 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 Monetary Authority.

(Replaced 26 of 1983 s. 6. Amended 16 of 1984 s. 4; 82 of 1992 s. 5) 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) 5A. Appointment of Monetary Authority (1) The Financial Secretary shall appoint a person to be the Monetary Authority on such terms and conditions as he thinks fit.

(2) The Monetary Authority shall- (a) assist the Financial Secretary in the performance of his functions under this Ordinance; (b) perform such functions as the Financial Secretary may direct; and (c) perform functions imposed on or assigned to the Monetary Authority by any other Ordinance.

(3) The Financial Secretary may appoint, on such terms and conditions as he thinks fit, persons to assist the Monetary Authority in the performance of the functions of the Monetary Authority specified in subsection (2).

(4) Notwithstanding subsection (2) (b) and (c), the Monetary Authority and persons appointed to assist him under subsection (3) shall be regarded, for all purposes, as employed in connection with the purposes of the Fund.

(5) In this section "functions" includes powers and duties.

(Added 82 of 1992 s. 4) 5B. Delegation to Monetary Authority (1) The Financial Secretary may delegate to the Monetary Authority the powers and duties conferred or imposed on the Financial Secretary under this Ordinance.

(2) A delegation or a subdelegation under this section- (a) shall not preclude the Financial Secretary from exercising the power or performing the duty; (b) may be conditional, qualified or limited as the Financial Secretary thinks fit; (c) may be to a person performing the functions of the Monetary Authority for the time being; and (d) may be amended by the Financial Secretary.

(3) The Financial Secretary may include in a delegation under this section power to subdelegate the powers and duties delegated on such terms and to such person or to any person of a class or description, as may be specified by him.

(Added 82 of 1992 s. 4) 6. Charges on Fund 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 (App. III, p. AA 1); 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; 20 of 1948 s. 4) 7. Audit of Fund 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; 26 of 1983 s. 5) 8. Transfer from the Fund 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) [S. 4 (1)] SCHEDULE HONGKONG 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 Monetary Authority.

(Replaced 26 of 1983 s. 6. Amended 16 of 1984 s. 4; 82 of 1992 s. 5)