The Linked Exchange Rate system, introduced 23 years ago, continues to be a bulwark against monetary instability, Monetary Authority Chief Executive Joseph Yam says.
In his latest Viewpoint article published on the authority's website, Mr Yam said the arrangement represented the first anchor for a component of the Monetary Base, and has been refined over the years, considerably ahead of time to avoid destabilising crises.
Noting Hong Kong has effective control of a monetary base that is very well defined, Mr Yam cautioned the city is not immune to any monetary crisis.
"It is in the nature of crises that they are often unpredictable. And globalisation means that a monetary or financial crisis does not necessarily erupt from domestic events. With the Basic Law mandating that no foreign exchange control policies shall be applied to Hong Kong, and with Hong Kong being a significant international financial centre of considerable liquidity and having a fixed exchange rate, we are arguably more vulnerable than others to monetary and financial instability.
"What is important is that, in the light of changing circumstances, we should ensure that we have the necessary armoury to deal with shocks in our monetary and financial systems in the best way we can.
"Having nursed the Linked Exchange Rate system from day one and been responsible for the various refinements introduced since then, my views are probably biased, but for what it's worth, I think we are now in that position. We nevertheless welcome any views anybody may have on monetary management in Hong Kong so that we can further refine the system if necessary."
Go To Top
|