(including southeast asia) have adopted a variety of foreign exchange rate policies, varying from hong kong’s currency board system which links the hong kong dollar to the us dollar, to the “independently floating” exchange rates of japan, the philippines, and south korea. Hong kong has what is widely regarded as the most credible currency peg in the world — virtually unchanged for more than three decades yet the hong kong dollar is hitting four-year lows and. Argentina and hong kong, currency boards have typically been imple-mented by small developing economies (eg, antigua and barbuda, brunei darussalam, djibouti, estonia, and lithuania) advantages of currency boards that a currency board is immune to the risk of devaluation. The hong kong dollar depreciated so rapidly that authorities feared it would produce a run on the banking system, which would have reinforced the currency crisis as a result, it was decided that the only way to restore confidence in the financial system was to go back to a currency board arrangement. The planned reduction in the us federal reserve’s balance sheet will eventually lead the hong kong dollar to 785 against the greenback, to which it is pegged – the weak side of the allowed.
Greenwood, who is invesco's chief economist, told cnbc that hong kong's peg was at the head of a currency board revival over the past 20 to 30 years, most of which served the adopting countries well. The hong kong dollar is a freely convertible currency that, since late 1983, has been linked via a de facto currency board to the us dollar at an exchange rate that is allowed to fluctuate in a narrow band between hk$775 – hk$785 = us$1. Hong kong sar 206 cpss – red book – 2012 the legal tender notes issue ordinanceregulates the issue of banknotes and currency notes under the ordinance, the banknotes issued by thebank of china (hong kong) limited, the standard chartered bank (hong kong) and the hongkong and shanghai.
The hong kong economy 389 help stabilize any exchange rate ﬂuctuations a country operating such a currency board should normally enjoy a lower and more stable inﬂation. Linked exchange rate system in hong kong a linked exchange rate system is a type of exchange rate regime that pegs the exchange rate of one currency to another it is the exchange rate system implemented in hong kong by honorary vice-president at the university of hong kong, professor yc jao , to stabilise the exchange rate between the hong. Joseph yam chief executive hong kong monetary authority contents foreword a modern day currency board system glossary foreword this summer i prepared a paper addressing the question of how a modern currency board system should be organized.
The hong kong dollar’s peg was once also a tight link to the yuan, which was itself pegged to america’s currency but since china modified the peg, the yuan has appreciated by over a third. Abstract at the time of the restoration of the currency board system in october 1983 the author was the editor of, and a leading contributor to, asian monetary monitor (amm), a hong kong-based bi-monthly publication that was published between 1977 and 1996. Hong kong became a special administrative region of china in 1997, and its economy is increasingly integrated with china through trade, tourism, and financial links hong kong retains full legal autonomy over its currency. Under hong kong’s “currency board” system, the hkma buys the local dollar with us dollars when the currency hits the weak side of the trading band, using some of its us$3588 billion of foreign-exchange reserves.
Hong kong’s basic law, as agreed between china and britain, means hong kong will retain its own currency (the hong kong dollar), legal system, and parliamentary system for fifty years hong kong exercises a limited form of self-government. A brief history of hong kong’s currency board system amid considerable financial turbulence stemming from the sino-british negotiations over the future of hong kong, the lers system was established in october 1983. Abstract hong kong is one of a few economies that operate a variation of a currency board as the basis of their monetary system this system has persisted despite dramatic changes in the way that the international monetary system operates and despite changes in hong kong's political status. Section 74 discusses the effect of rules and discretion on the credibility of hong kong's currency board system from the point of view of delegation of functions and the incentive to intervene the final section concludes.
Hong kong monetary policy & the economy: recovering from asian financial crises the discipline of the currency board arrangements under that system the hong kong dollar is linked to the us dollar at an exchange rate of hk$78 to the currency board arrangements are complex, with many benefits. Currency board system a monetary system that complies with the monetary rule requiring that any change in the monetary base should be matched by a corresponding change in foreign currency reserves in a specified foreign currency at a fixed exchange rate. How to cite blagov, b and funke, m (2016), the credibility of hong kong's currency board system: looking through the prism of ms-var models with time-varying transition probabilities. Travel information, find valuable information on local visa requirements, currency and weather, when planning to travel to hong kong be it for business or leisure purposes.
Hong kong, perhaps the most best-known country whose economy employs a currency board, experienced a financial crisis in 1997/1998, when speculation caused interest rates to soar and the value of. 49 31 the operation of the linked exchange rate system in hong kong in order to maintain the linked exchange rate between hong kong dollar and the us dollar. Hong kong is one of a few economies that operate a variation of a currency board as the basis of their monetary system this system has persisted despite dramatic changes in the way that the.