Financial Markets

1007 WordsFeb 12, 20125 Pages
Financial Markets Introduction 1 Financial Markets & Flow of Funds Financial Markets M k t Lenders Households Firms Governments Foreigners Borrowers Households Firms Governments Foreigners Financial Institutions Note that lenders are suppliers of funds (surplus units) while borrowers are demanders/users of funds (deficit units) 2 1 Flow of Funds Financial institutions perform the essential function of channeling funds from surplus units to deficit units. Agents (e.g. brokers). Carry out the instructions of lenders and have no rights to the benefits that flow from the acquisition of the instruments by the l d lenders. Asset transformers (e.g. banks, investment/finance companies). Involved as principals in the…show more content…
e of law and fair market Low and simple taxation No barriers of access to the market by foreign businesses No restrictions on capital flows into and out of Hong Kong No exchange controls 16 8 Hong Kong Monetary Authority Set up on 1 April 1993 De facto central bank in Hong Kong Objectives: To maintain currency stability To promote the efficiency, integrity and development of the financial system • Within the framework of the linked exchange rate system • Through sound management of the Exchange Fund • Monetary policy operations • Through payment and settlement arrangements 17 Hong Kong Monetary Authority Objectives ( Obj ti (cont’d) ’d) To ensure the safety and stability of the banking system • Through regulation of banking business and of taking deposits • Through supervision of Authorised Institutions (AIs) under a three-tier system – Licensed banks (LBs) – Restricted licensed banks (RLBs) – Deposit taking companies (DTCs) 18
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