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The Costs and the Benefits of Hong Kong’ Currency Board System

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The Costs and the Benefits of Hong Kong’ Currency Board System
The costs and the benefits of Hong Kong’ currency board system

A e f g w se f s f s f s f s f s f s f s f s f s f s f
You Zhang
1148100
Introduction S b c d e f g w se f s f s f s f s f s f s f s f s f s f s f s f s Hong Kong, a province in the west-east of China, has developed from a small fishing community into an international city in modern times which is contributes to the economic policy as well as political policy. S b c d e f g w se f s f s f s f s f s f s f s f s f s f s f s f s The currency board system was first introduced in the British colony of Mauritius in the year of 1849 and Hong Kong introduced this system in 1983. The currency board system comprises the currency board, commercial banks, and other financial institutions. It differs from the central bank. A central bank is a monetary authority that has discretionary monopoly control of the supply of the reserves of commercial banks and a currency board is a monetary institution that issues notes and coins (and, in some cases, deposits) fully backed by a foreign "reserve" currency and fully convertible into the reserve currency at a fixed rate and on demand. S b c d e f g w se f s f s f s f s f s f s Does the economy of Hong Kong benefits from the currency board system? How much does the system contribute? In this essay, we are going to start from the monetary systems in Hong Kong’s history. The second part is the theoretical analysis on advantages and disadvantages Hong Kong’s currency board system. The experience Hong Kong’s currency board system had are going to be discussed in part three a. A conclusion will be draw at the end. History S b c d e f g w se f s f s f s f s f s f s f s f s f s f s f s f s Monetary policy in Hong Kong has been made to construct a stable and sustainable economic system for more than one hundred fifty years. Looking back at the history of Hong Kong’s economic system, this task appears not an easy one. Tracing back


References: Copeland L., 2005, Exchange Rates and International Finance, Prentice Hall, England Greenwood J., 2004, Currency Boards in theory and Practice: Hong Kong and Argentina, AMVESCAP Index of Economic Freedom, 2006, Hong Kong 2006 [online], Available: http://www.heritage.org/research/features/index/country.cfm?ID=HongKong (access on 13 March 2006) Kwan Y.K Li H., 2001, Should the Hong Kong Dollar Be Delinked?, University of Toronto Lu D Maute J., 2000, Stabilization via Currency Board, University Hohenheim Park K
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