The Hong Kong Monetary Authority is proposing the use of a new special cashier order to ease pressure on the banking system in the event of highly popular initial public offerings, deputy chief executive Norman Chan Tak-lam said. The move is an attempt to ease pressure on the interbank payment system in the event of heavily oversubscribed offerings. The best example of this was last year's record offering by red chip Beijing Enterprises, which was 1,276 times oversubscribed, freezing $215 billion in the interbank payment system for a week. The authority has been studying the banking sector to seek ways to ease the pressure. Mr Chan said a proposal had emerged to use a specially designed cashier order for share applications of more than $5 million. 'This special cashier order will only be settled on the refund day with the unsuccessful portion offset by the refund monies,' he said. 'Only the portion which has successfully applied for the new shares would be settled in the payment system. That will reduce significantly the amount of money to be settled by the interbank system.' Under this proposal, banks issuing cashier orders will pay interest to the receiving banks for deferred settlement of the face value of the orders. Applicants for new shares will also need to pay interest to the issuing bank if the applications are financed by overdrafts. 'The interest rate will be determined by the market. It would also be purely voluntary for market participants to use cashier orders.' Another proposal is that unsuccessful application monies would be automatically credited to applicants' designated bank accounts instead of being sent by cheque. 'This will avoid queues of applicants for refund cheques as happened with Beijing Enterprises,' he said. 'If this proposal is implemented, it would be compulsory for all applicants to adopt this option.'