• Sun
  • Dec 28, 2014
  • Updated: 11:04am
NewsHong Kong

Vendors 'can't be forced to take HK$1,000 notes' says Monetary Authority

PUBLISHED : Wednesday, 22 January, 2014, 5:43pm
UPDATED : Thursday, 23 January, 2014, 4:19pm

The government has no legal power to force retailers spooked by a spate of counterfeits to accept HK$1,000 notes, the Hong Kong Monetary Authority says.

The HKMA made the comment in a paper submitted to the Legislative Council after high-quality fake notes based on the 2003-series HK$1,000 notes issued by the Bank of China and HSBC surfaced last month.

Many shops and restaurants have since put up notices saying that no HK$1,000 notes would be accepted, often regardless of the series.

Chinese-language media have reported that chain stores like 7-Eleven and even government departments have rejected HK$1,000 notes.

New World First Ferry Services apologised to the public for turning down payments made with HK$1,000 banknotes at all its piers during the Christmas and New Year holiday.

In its paper, the authority says that while the HK$1,000 notes are regarded as a sufficient and valid mode of payment under the Legal Tender Notes Issue Ordinance, merchants can still determine the terms of all commercial transactions, including the mode of payment.

It reiterates that the authority and banks will speed up the process of replacing the 2003 series of HK$1,000 notes, which began when the 2010 series of banknotes was introduced.

But it adds that actual progress will depend on how quickly banknotes return to the banking system.

As of yesterday, the police had seized 201 counterfeit HK$1,000 notes in Hong Kong - 149 being passed off as Bank of China bills and 50 purportedly from HSBC - since December 23. More than 150 have been seized in Macau.



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This article is now closed to comments

If the government cannot make it a law that the currencies issued by the banks that are governed by the government administration, must be accepted by all parties conducting businesses in the city, then it means such currency is not a legal tender. Take a simplified approach - if an employee is paid in $1,000 bill and no retailers accept such money, can an employee demand to be only paid in the currency he/she accept? The fact that there is a series of fake notes should not be a reason for such currency to be stopped in use but proper control measures should be in place to detect the real notes from the fake. Confidence in any currency must be a pivotal responsibility of the government and effective actions must be taken. By simply stating the government cannot compel retailers to accept the currency the government approved for use is nothing short of stating the government is acting irresponsibly.
Royal Mint: In England and Wales the £5, £10, £20 and £50 notes are legal tender for payment of any amount. However, they are not legal tender in Scotland and Northern Ireland. How did we end up with this nonsense in HK?
Then the Legal Tender Notes Issue Ordinance and other related ordinances ought to be amended. How is it possible that banknotes can be refused as legal tender?

While it may be reasonable to allow merchants the freedom of choice with regards acceptance of other forms of payment, such as credit cards and cheques, banknotes are the fundamental form of payment and acceptance of such cannot be negotiable. It is clear that the relevant ordinances must be expeditiously amended.


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