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Investors move funds to deregulated time deposits

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THE initial phase of liberalising interest rates has shown a significant movement of funds from savings to deregulated time deposits, the Hong Kong Monetary Authority (HKMA) says.

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The increase in time deposits was also part of the larger move by depositors out of the stock and property markets.

In October last year, when time deposits fixed for more than one month were freed from interest rate rules, savings deposits fell by $6.6 billion, a 2.4 per cent drop.

By contrast, deregulated time deposits of less than $500,000 surged 31 per cent, up $5.6 billion.

'It seems that people were switching from savings to time deposits,' said David Carse, deputy chief executive of the HKMA, which has kept a close watch on deposits since deregulation started.

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The HKMA has maintained close contact with individual banks. A sample of 12 banks are required to submit regular reports on the volume of deposits in each type of account.

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