AT first glance, it seems that depositors are getting better rates on their Hong Kong dollar fixed accounts.
The central bank - through its newly-installed network of monitoring - recorded last month increases of 45 to 63 basis points in interest rates on time deposits of more than one month.
This is an eagerly awaited result of the removal of interest rate caps on these deposits.
Look again though, and in some cases the increase is more nominal than real because clever bankers looking for ways to circumvent the interest rate agreement have long been using swap deposits to lure depositors.
Swap deposits offer a much higher interest rate, comparable with the rate earned on a US dollar account. As the minimum amount eligible for swap deposits has gone down substantially in recent years, they have become close substitutes for time deposits.
The first phase of deregulation, the lifting of the rate cap on time deposits, merely takes away the raison d'etre of swap deposits.