Hong Kong's Link to the US Dollar: Origins and Evolution

John Greenwood

Nov 2007 · Hong Kong University Press

About this ebook

Hong Kong's Link to the US Dollar covers the origins of the city's currency crisis in 1983, the initial resolution of the crisis by creation of a traditional currency board, the subsequent problems leading to the Asian financial crisis of 1997-98, and the later reforms. The epilogue traces Hong Kong's monetary developments between 1990 and 2005. This valuable compendium of articles, originally written in the bimonthly journal Asian Monetary Monitor during the years 1981-89, includes the key article that formed the basis for the Hong Kong government's decision in 1983 to peg the currency to the US$, as well as other important documents of historical record. The main contribution of the book is its detailed monetary analysis of Hong Kong's unique financial system before and after the currency crisis of 1983. The book explains the collapse of the floating HK$ under the pressure of capital outflows during the Sino-British negotiations (1982–84) over the future of Hong Kong, the fascinating story of the introduction of the linked rate system pegging the Hong Kong dollar to the US dollar, and the subsequent gradual process of reform and refinement of the currency board mechanism (1988–2005). Each chapter is preceded by an introductory narrative that puts the analysis in its historical context and places the economic argument in perspective. Hong Kong's Link to the US Dollar will enable readers to obtain a comprehensive picture of why the linked rate system was put in place, how it works, and why it has been strengthened over the years.

About the author

John Greenwood OBE is Chief Economist of INVESCO plc. A graduate of Edinburgh University, he did economic research at Tokyo University and was a visiting research fellow at the Bank of Japan (1970--74). From 1974 he was Chief Economist with GT Management plc, based initially in Hong Kong and later in San Francisco. As editor of Asian Monetary Monitor he was alone in pointing out the flaws in Hong Kong's monetary system in the years leading up to the currency crisis of 1983, and is well-known as the architect of the linked rate between the HK$ and US$ that has been operating ever since. Mr. Greenwood was a director of the Hong Kong Futures Exchange Clearing Corporation (1987--91) and council member the Stock Exchange of Hong Kong (1992--93). An economic adviser to the Hong Kong Government (1992--93), he has been a member of the Committee on Currency Board Operations of the Hong Kong Monetary Authority since 1998. He is also a member of the Shadow Monetary Policy Committee in England. Mr. Greenwood is a director of INVESCO Asia Ltd in Hong Kong, INVESCO Asset Management Singapore Ltd, and the Hong Kong Association in London.