Exchange Fund Ordinance


Published: 1997-06-30

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Cap 66 - EXCHANGE FUND ORDINANCE 1

Chapter: 66 EXCHANGE FUND ORDINANCE Gazette Number Version Date

Long title 30/06/1997


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]

(Originally 54 of 1935 (Cap 66, 1950 Ed.)

Section: 1 Short title 30/06/1997


This Ordinance may be cited as the Exchange Fund Ordinance.
(Amended 20 of 1948 s. 4)


Section: 2 Interpretation 30/06/1997


In this Ordinance, unless the context otherwise requires-
"authorized institution" (認可機構) means a bank, a restricted licence bank or a deposit-taking company licensed or

registered under the Banking Ordinance (Cap 155); (Added 12 of 1995 s. 2)
"foreign exchange" (外匯) means all freely convertible currencies other than Hong Kong currency; (Replaced 12 of

1995 s. 2)
"freely convertible" (可自由兌換) with respect to a currency means that it may be traded on the international foreign

exchange markets; (Added 12 of 1995 s. 2)
"legal tender notes" (法定貨幣紙幣)-

(a) means-
(i) currency notes issued in Hong Kong by the Financial Secretary pursuant to section 3(1) of the

Legal Tender Notes Issue Ordinance (Cap 65); and
(ii) bank notes issued in Hong Kong by a note-issuing bank in accordance with the terms and

conditions (if any) to which its authorization (or deemed authorization) under section 3(2) of that
Ordinance is subject; and

(b) includes any bank notes which were legal tender pursuant to that Ordinance as in force immediately
before the commencement of the Bank Notes Issue (Amendment) Ordinance 1995 (98 of 1995);
(Added 98 of 1995 s. 6)

"Monetary Authority" (金融管理專員) means the Monetary Authority appointed under section 5A; (Added 82 of
1992 s. 2)

"note-issuing bank" (發鈔銀行) has the meaning assigned to it by section 2 of the Legal Tender Notes Issue
Ordinance (Cap 65). (Replaced 98 of 1995 s. 6)

(Amended 98 of 1995 s. 6)

Section: 3 Establishment, control and management of Exchange

Fund
68 of 1999 01/07/1997



Remarks:
Adaptation amendments retroactively made - see 68 of 1999 s. 3


(1) There shall be established a fund to be called "the Exchange Fund" (外匯基金) 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 ex officio chairman and of which the other members



Cap 66 - EXCHANGE FUND ORDINANCE 2

shall be appointed by the Chief Executive. (Amended 12 of 1946 s. 2; 26 of 1983 s. 2; 82 of 1992 s. 3; 68 of 1999 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 such securities or other assets as he, after having consulted the
Exchange Fund Advisory Committee, considers appropriate; and the Financial Secretary may for the account of the
Fund- (Replaced 25 of 1971 s. 2. Amended 8 of 1975 s. 2; 26 of 1983 s. 2; 12 of 1995 s. 3)

(a) buy or sell such currency, foreign exchange, gold, silver, securities or assets accordingly; and (Added
12 of 1995 s. 3)

(b) after having consulted the Exchange Fund Advisory Committee, enter into any financial arrangement
that he considers appropriate for the prudent management of the Fund. (Added 12 of 1995 s. 3)

(3) Without restricting the generality of the powers of the Financial Secretary under subsections (1) and (1A)
but 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 the general revenue. (Replaced 12 of 1995 s. 3)

(3A) There shall be credited to the Fund the value of-
(a) any coinage issued under or by virtue of the Coinage Ordinance (Cap 454);
(b) any legal tender note referred to in paragraph (a)(i) of the definition of "legal tender notes";
(c) any proceeds of sale of such coinage after it has ceased to be legal tender. (Replaced 98 of 1995 s. 7)

(4) The aggregate amount of borrowing under subsection (3) 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; 12 of 1995 s. 3)

(5) The Legislative Council may from time to time, by resolution proposed, with the approval of the Chief
Executive in Council, by a designated public officer required and directed by the Chief Executive to attend a sitting of
the Legislative Council for that purpose, 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;
12 of 1995 s. 3; 68 of 1999 s. 3)

Section: 3A Power to require accounts to be opened, maintained and

operated
68 of 1999 01/07/1997



Remarks:
Adaptation amendments retroactively made - see 68 of 1999 s. 3


(1) The Financial Secretary may by notice in writing served on an authorized institution require that institution
to open an account with the Monetary Authority for the account of the Exchange Fund and to maintain and operate
such account on such terms and conditions as he considers appropriate having regard to the purposes for which the
Exchange Fund is required to be or may be used under section 3(1) and (1A).

(2) The Financial Secretary may at any time by notice in writing served on an authorized institution add to or
vary the terms or conditions imposed on it under subsection (1), in any manner which is not inconsistent with the
fulfillment of the purposes for which the Exchange Fund is required to be or may be used under section 3(1) or (1A).

(3) Any authorized institution aggrieved by any requirement imposed on it under subsection (1) or by any
addition or variation made under subsection (2) may appeal to the Chief Executive in Council against such
requirement, addition or variation. (Amended 68 of 1999 s. 3)

(4) The Chief Executive in Council may determine an appeal under this section by confirming, varying or
reversing the requirement, addition or variation against which the appeal was lodged. (Amended 68 of 1999 s. 3)

(5) A notice under this section may be served on an authorized institution by leaving it at or sending it by post
to its principal place of business in Hong Kong.

(Added 12 of 1995 s. 4)




Cap 66 - EXCHANGE FUND ORDINANCE 3

Section: 4 Certificates of indebtedness 30/06/1997


(1) The Financial Secretary is authorized to issue to any note-issuing bank, to be held as cover for legal tender
notes (other than such notes referred to in paragraph (a)(i) of the definition of "legal tender notes"), a certificate 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 the notes so issued, 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 and may be
used for such purposes in the event of a note-issuing bank being wound up in Hong Kong or elsewhere. (Replaced 4
of 1951 Schedule. Amended 26 of 1983 s. 3; 16 of 1984 s. 3; 58 of 1993 s. 3; 98 of 1995 s. 8)

(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
reduction of the amount of the indebtedness of the Government as recorded in the register maintained by the Monetary
Authority under subsection (4) by payments either in Hong Kong dollars 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 reduction of the amount of the indebtedness of the Government as
recorded in the register maintained by the Monetary Authority under subsection (4). (Amended 12 of 1946 s. 2)

(4) The Monetary Authority shall establish and maintain a register of all certificates of indebtedness issued by
the Financial Secretary and of all payments made to the Financial Secretary pursuant to subsection (1) and all
payments made by the Financial Secretary for the reduction of the amount of the indebtedness of the Government
pursuant to subsection (2) or (3). (Added 12 of 1995 s. 5)

(5) A document purporting to be a copy of a register maintained by the Monetary Authority under subsection
(4) (or any part thereof) or, where such register is maintained otherwise than in a legible form but is capable of being
reproduced in a legible form, a document purporting to be such a reproduction (or a reproduction of any part thereof)
and purporting to be signed by the Monetary Authority shall be admissible in any judicial proceedings and shall be
deemed to have been signed by the Monetary Authority and the facts recorded thereon shall be deemed to be
established, in the absence of evidence to the contrary. (Added 12 of 1995 s. 5)

(Amended 12 of 1995 s. 5)

Section: 4A (Repealed 64 of 1987 s. 31) 30/06/1997




Section: 5 Preservation of limits on note issue 30/06/1997


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 section 4 the
Financial Secretary shall take into account such maximum limits.

(Replaced 4 of 1951 Schedule. Amended 7 of 1978 s. 3; 12 of 1995 s. 6)

Section: 5A Appointment of Monetary Authority 30/06/1997


(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" (職能) includes powers and duties.
(Added 82 of 1992 s. 4)



Cap 66 - EXCHANGE FUND ORDINANCE 4


Section: 5B Delegation to Monetary Authority 30/06/1997


(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)

Section: 6 Charges on Fund 68 of 1999 01/07/1997


Remarks:
Adaptation amendments retroactively made - see 68 of 1999 s. 3


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 Coinage Ordinance (Cap 454); and (Added 26 of 1983 s. 4. Amended 81 of 1994 s. 7)

(b) any incidental expenditure which the Chief Executive 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;
68 of 1999 s. 3)


Section: 7 Audit of Fund 68 of 1999 01/07/1997


Remarks:
Adaptation amendments retroactively made - see 68 of 1999 s. 3


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

(Amended 44 of 1936 s. 3; 26 of 1983 s. 5; 68 of 1999 s. 3)

Section: 8 Transfer from the Fund 68 of 1999 01/07/1997


Remarks:
Adaptation amendments retroactively made - see 68 of 1999 s. 3


Where the Financial Secretary is satisfied that such transfer is not likely to affect adversely his ability to fulfill
any purpose for which the Exchange Fund is required to be or may be used under section 3(1) or (1A), he may, after
consulting the Exchange Fund Advisory Committee, and with the prior approval of the Chief Executive in Council,
transfer from the Fund to the general revenue or to such other fund or funds of the Government as may be authorized
by the Chief Executive in Council any sum or part of any sum in excess of the amount required to maintain the assets
of the Fund at 105% of the total obligations of the Fund for the time being outstanding and may for the purpose of any
such transfer realize any of the assets of the Fund.



Cap 66 - EXCHANGE FUND ORDINANCE 5

(Replaced 12 of 1995 s. 7. Amended 68 of 1999 s. 3)

Schedule: SCHEDULE 30/06/1997


[section 4(1)]


HONG KONG


EXCHANGE FUND ORDINANCE


(Chapter 66)


Certificate of Indebtedness


This certificate issued under the Exchange Fund Ordinance (Chapter 66) represents indebtedness of the Hong
Kong Government without interest
to ................................................ .........................................................................................................................................
.... for the amount shown as such in the register of the Monetary Authority maintained under section 4(4) 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; 12 of 1995 s. 8)

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