Celebration of the Issuance of Hong Kong Dollar by Bank of China in May, 1994
Early 1983, Bank of China proposed Opinion on the Continued Use of Hong Kong Dollar after Resumption of Sovereignty over Hong Kong, holding that in a pretty long term following China's resumption of Sovereignty over Hong Kong, it was necessary to continue the use of Hong Kong Dollar as a freely convertible currency, so as to maintain the stability of Hong Kong financial market and economic prosperity; and that during the transition period for the return of Hong Kong, China should make efforts to enable Bank of China to gradually participate in the issuance and administration of Hong Kong Dollar under the same conditions as those granted to Hong Kong and Shanghai Banking Corporation (HSBC).
For a long time, Hong Kong Dollar had been issued by two UK-funded banks, namely, HSBC and Standard Chartered Bank, with the former accounting for about 80% of the total amount and the latter accounting for approximately 10%, and the remaining 10% being issued by Hong Kong British authorities. In the early 1980s, Chief Secretary of Hong Kong British authorities made a suggestion to Vice President of Bank of China Head Office and Chief Audit Officer in Hong Kong, trying to find out whether Bank of China Hong Kong Branch was willing to participate in the issuance of Hong Kong Dollar.
In order to ensure the smooth transition of Hong Kong on July 1, 1997, Chinese Government decided that Bank of China could participate in the issuance of Hong Kong Dollar at an appropriate time before 1997. As Hong Kong was still under the control of Hong Kong British authorities during the transition period, it was necessary to carry out diplomatic negotiations with the British side and to establish Bank of China's power to issue currencies through legislative procedures.
Bank of China began to make necessary preparations for the issuance of Hong Kong Dollar. A consensus was finally reached on the implementation scheme whereby Bank of China would participate in the issuance of Hong Kong Dollar after several rounds of negotiations with Hong Kong British authorities. In July 1992, Bank of China formally filed an application to Financial Secretary of Hong Kong British authorities for the issuance. In January 1993, Hong Kong Executive Council authorized Bank of China Hong Kong Branch to formally participate in the issuance of Hong Kong Dollar as a note-issuing bank of Hong Kong. In May 1994, Bank of China Hong Kong Branch officially obtained the right to issuance of Hong Kong Dollar.
The First Batch of Hong Kong Dollars Issued by Bank of China (May 1, 1994)
For quite some time, Macau Portuguese authorities had not established a central bank. In 1905, the government began to commission Banco Nacional Ultramarino Macau Branch to issue Macau Pataca. It was not until the year of 1980 that Macau Portuguese authorities set up an "issuing agency" with the nature of central bank, and withdrew the right of issuance from Banco Nacional Ultramarino. In 1989, Macau Portuguese authorities revoked the issuing agency and established Autoridade Monetaria de Macau, and still commissioned Banco Nacional Ultramarino Macau Branch to issue banknotes.
In October 1987, the secretary for Economy and Finance of Macau Portuguese authorities arranged to meet the general manager of Bank of China Macau Branch and requested Bank of China to participate in the issuance of banknotes. In August 1990, Hong Kong and Macau Affairs Office of State Council proposed a framework for Bank of China to participate in the issuance of Macau Pataca, under which Macau Portuguese authorities, Banco Nacional Ultramarino Macau branch and Bank of China Macau Branch would jointly set up an issuing bank with each of the three parties holding a third of the shares. Such framework helped Bank of China familiarize itself with the internal operation and management of the issuance of Macau Pataca. This framework varied during the subsequent Sino-Portugal negotiations, and under the changed framework, Macau Pataca would be jointly issued by Bank of China and Banco Nacional Ultramarino. After nearly three years of diplomatic negotiations, Sino-Portuguese Joint Liaison Group arrived at a consensus on July 12, 1994 and singed Minutes of Meeting of Sino-Portuguese Joint Liaison Group on the Issuance of Banknotes in Macau. On October 13, 1995, Macau Government and Bank of China signed a contract on issuance of banknotes. On October 16 of the same year, Bank of China officially began to issue banknotes of Macau Pataca.
The First Batch of Macau Patacas Issued by Bank of China (October 16, 1995)
During the transition periods of Hong Kong and Macau's return to the motherland, it was of great significance for Bank of China to participate in the issuance of Hong Kong Dollar and Macau Pataca.
I. Bank of China's participation in the issuance of banknotes was the embodiment of China's sovereignty over Hong Kong and Macau, and it was a special historical mission bestowed on Bank of China.
II. Bank of China was the second largest financial institution in Hong Kong and the largest one in Macau, so its branches in Hong Kong and Macau, with eminent reputation, played a significant role in the development of local economy. During the transition periods of the return of Hong Kong and Macau, Bank of China's participation in the banknote issuance would help realize the prosperity and stability of the economy and finance of both places.
III. Bank of China's participation in banknote issuance would enable it to take part in the financial management of Hong Kong and Macau on behalf of the sovereign state, and would be also conducive to further improvement of Bank of China's local position and financial voice.
IV. Bank of China's participation in banknote issuance would help to further improve the position of Bank of China in the international financial market.
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