Page 156 - A Banker Down the Rabbit Hole

The locals were apprehensive of the tyranny of the 'Red Army' of China
who would rule Hong Kong after enjoying a century of democratic system
under British rule having enjoyed so much freedom of speech. Hong Kong
local people staged repeated demonstrations for an Independent Hong
Kong. The British were not prepared to leave Hong Kong without
addressing the concerns of the local population. China agreed to keep
Hong Kong as SAR, a 'Special Administered Region' for next 50 years after
the power transfer in 1997. This was done for smooth and trouble free
transition and to avoid sudden withdrawal of huge Foreign Direct
Investment in Hong Kong by several countries thereby protecting its
current status of a major financial centre.

Hong Kong is currently governed under the principle of "one country, two
systems", under which China has agreed to give the region a high degree
of autonomy and to preserve its economic and social systems for 50 years
from the date of the Handover. In 1997, China resumed the exercise of
sovereignty over Hong Kong. Its foreign relations and defence are the
responsibility of China.

Hong Kong as an International Financial Center

The Government, through the Hong Kong Monetary Authority, authorizes
three commercial banks to issue currency notes in Hong Kong:
1. The Hong Kong and Shanghai Banking Corporation Limited;

2. The Standard Chartered Bank (Hong Kong) Limited; and
3. The Bank of China (Hong Kong) Limited.

In most countries of the world the issue of bank notes is handled
exclusively by a single Central Bank or the Government. The arrangements
in Hong Kong are unusual but not unique, as a comparable system is used
in the United Kingdom where seven commercial banks issue bank notes
(three in Scotland, four in Northern Ireland and also two banks issue bank
notes in Macau.)

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