Hello, I am looking for someone to write an essay on What have been the costs and benefits of Hong Kongs Currency Board System since 1983. It needs to be at least 1250 words.
As a result, confidence in the HK dollar and economy began to diminish’ (Hanson). Also that year, the business scenario was not good – the stock market down by 50 percent, property market experiencing downturn and there were runs on the small banks. ‘The value of the HK dollar continued to decrease throughout the year and on September 24, 1983, reached an all-time low of HK$9.55 per US dollar’ (Hanson). ‘In less than a month, following a proposal made by Hong Kong business economist John Greenwood, the government announced that it would return to a currency board system, which would pursue an anti-inflationary policy and promote currency stability’ (Schuler). The CBA is an ‘idiosyncratic system since there is actually no currency board, and bank notes are issued by a few designated commercial banks, which alone deal directly with the monetary authority at the fixed exchange rate of HK$7.80 to the US dollar’ (Shu-ki Tsang). The CBA which was ‘also known as the “linked exchange rate system” or the “link” has revolved through several stages. From October 1983 – 1987, the Hong Kong government could not even define the monetary base and the theoretical forces of bank note arbitrage and competition did not seem to work’ (Shu-ki Tsang). The exchange rate was strengthened by the government interference in the foreign exchange market and interest rate handling. ‘To provide the Exchange fund with the necessary instruments to conduct “open market operations”, the Hong Kong government embarked on a series of programs to introduce Exchange Fund Bills (from March 1990) and notes (from May 1993).