HONGKONG banks have been asked to monitor the movement of mainland funds and report any unusual trends to the Monetary Authority.
The request comes from the chief executive of the Hongkong Monetary Authority, Joseph Yam Chi-kwong, and follows rumours that a capital flight from the mainland has begun in the light of the China's 16-point austerity plan to try and control its overheated economy.
Mr Yam said yesterday: ''If there is something happening outside Hongkong that may have an impact on us, then it is in our best interest to find out more.
''So far, we have not seen anything significant with China.'' During the week, the Hongkong-US dollar exchange rate moved up from 7.3 to almost 7.8, but quickly settled back to around 7.6, meaning the territory's unit is still on the strong side of its link to the greenback.
Mr Yam said the move in the exchange rate was caused by a rumour that Chinese firms had been ordered to repatriate funds. ''Only a small amount of money moved,'' he added.
He said that, at the end of March, mainland money in Hongkong was estimated to be $39 billion.
One leading banker said yesterday that mainland interests were moving their money from Hongkong banks to foreign-based financial institutions to keep it out of reach of mainland authorities.