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Hong Kong is a city where everything moves fast: traffic, business, capital flows, investment, business start-ups, IPOs, earnings and so on. Thus Hong Kong has is popular for its ability despite the fact that this is "A" (RAS administered region). In financial terms, Hong Kong today recognized internationally as one of the trading hubs in Asia.

But how far has it succeeded in becoming a major international and national financial center? The model of banking and finance from the West was introduced in Hong Kong at the end of the First Opium War, when Hong Kong was surrendered control to Great Britain.

The first bank to be based in Hong Kong by the British was "The Oriental Banking Corporation in 1845. The Hong Kong and Shanghai Banking Corporation, now known as HSBC, was founded in 1864 in Hong Kong.

Other British banks, European, American and Japanese followed suit. Modern Chinese banks also appeared in the late 19th century. The first scholarship was formed in Hong Kong in 1891. Several insurance companies also began to settle in the mid-19th century.

As a British colony Hong Kong has adopted a very liberal policy that will be called policy of "laissez-faire." This policy is that the government intervene as little as possible in the banking and financial exchanges in Hong Kong. This system allowed a rapid development of the financial sector due to the absence of barriers in the banking sector and the existence of regulations not binding.

The IRA was the agreement on interest rates was introduced in 1964. This agreement imposes rules on interest rates that banks on fixed deposits and loans. Since then the banks were subject to an interest rate of credit and deposit uniform called the bank base rate. These measures put in place by the IRA have generated much criticism from people in the world of finance in Hong Kong as Professor KY Chan.

These people were against these measures because they believed they prevented the principle of competition that all banks should be subject to the same regulations in terms of interest rates. Although this system allowed a large margin of profit for banks, he was at the expense of savers and borrowers, as the deposition rate was very low and the rate of borrowing was very high.

In 1966, after a banking crisis that affected the entire financial system, the Hong Kong Government decided that there were too many banks in the country. To remedy this problem, the Government imposed what was called the "moratorium". This "moratorium" was intended to lay down rules on licenses given to foreign banks. This episode was a serious setback in the development of Hong Kong as an international financial center.

Fortunately, it was not fatal for the banks involved who wanted to invest in the Hong Kong market. These banks could still invest through other means such as the acquisition of equity interests in existing domestic banks.

In the mid 70's, many multinational banks were increasingly frustrated because they could not open branches in Hong Kong. Faced with growing pressure from the multinationals and intense competition in Singapore, Hong Kong government announced in March of 1978 that Hong Kong was prepared to give new licenses to foreign banks if certain criteria and certain measures were filled by these banks.

Tags: Hong Kong; Great Britain; banking in Hong Kong; international money market

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