We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

What have been the costs and benefits of Hong Kongs Currency Board System since 1983 - Essay Example

Comments (0)
Summary
This study will critically analyze the costs and benefits of Hong Kong’s currency board system since 1983. The analysis of the essay is achieved in three main sections. First, currency board arrangement is defined…
Download full paper
GRAB THE BEST PAPER
What have been the costs and benefits of Hong Kongs Currency Board System since 1983
Read TextPreview

Extract of sample
What have been the costs and benefits of Hong Kongs Currency Board System since 1983

Download file to see previous pages... 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). On the other hand, the LAF, set up in June 1992, allowed the Exchange...
This study will critically analyze the costs and benefits of Hong Kong’s currency board system since 1983. The analysis of the essay is achieved in three main sections. First, currency board arrangement is defined. Moreover, the costs and benefits of Hong Kong’s currency board system since 1983 is investigated before finally concluding. ‘Currency board arrangement is a special case of a rules-based monetary system. It is a system based on rules rather than discretion that serves to establish credibility and avoid losses resulting from decisions that can sometimes be undertaken within a myopic timescale’ (Balino 1997). Hong Kong operated a ‘sterling exchange system from 1935 – 1973, excluding the years of Japanese occupation. The sterling exchange system is a currency board with note issue back by holdings of Sterling assets’ (Crosby 2000). Then, ‘between 1972 and 1974, the HK dollar was set at a fixed rate to the US dollar. From November of 1974 until the return of the currency board in 1983, the HK dollar floated freely against the US dollar’ (Hanson). Hong Kong being a Special Administrative Region of China is dependent on mainland demand but its monetary system is still attached to the U.S. If ever China retaliates against pressure for the trade protectionism in the United States, then Hong Kong would be caught in between.
As for its disadvantages, people may doubt the willingness and competence of the government to continue ‘perfect convertibility at the specified rate’ ...Download file to see next pagesRead More
Comments (0)
Click to create a comment
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
The business scenario of Hong Kongs Hotel Industry
The objective of this research proposal is to estimate the exact business scenario and market inclinations existing within the business environment of Hong Kong’s hotel industry prior to introduction of the planned business. Moreover, it will also offer a detailed idea about consumers’ preferences, which act as one of the essential factors for assessing a business environment.
22 Pages(5500 words)Essay
Hong Kongs Economy
Hong Kong enjoys a unique status as a Special Administrative Region because it retains for the next fifty years (until 2047) what is acknowledged as the world's most liberal capitalist economy while being a part of the largest and most progressive Communist (although with a socialist economic system) nation on earth.
5 Pages(1250 words)Research Paper
How to maintain Mr. Juicy as the market leader in the Hong Kongs chilled juice market
Nowadays, Mr. Juicy is the clear dominant leader in Hong Kongs chilled juice market, holding more than 65% share. Citrus Growers International ensures the core values of the Mr. Juicy brand as freshness, freshness,
28 Pages(7000 words)Essay
This assignment focuses on Hong Kongs special role in the 1997-1998 Asian financial crisis
first question arises, and the affirmative answer to the second is obscured, because Hong Kong continues to be viewed through a prism οf improbable opposites. It prescribed that, come July 1st 1997, once the first local chief executive had taken over from the last British
3 Pages(750 words)Essay
Benefits and costs
Pollution created by vehicles causes market failure. In most heavily populated areas of the US, personal automobiles are the largest contributors to exhaust emissions (OEERE 1). American cars produce 20 percent energy
4 Pages(1000 words)Essay
Hong Kongs Approach to Financial Stability
Crises management is a process by which an organization deals with major events to threat that tries to bring harm to the organization. It becomes very difficult to act during a crisis due to the shear element of surprise the crises meets the
3 Pages(750 words)Essay
The UK is a member of the European Union but has not adopted the euro as its currency. To what extent do the benefits of membership of a monetary union such as the Eurozone outweigh the costs
Single currency usage was the primary motto introduced for the Union. All member states of the EMU use a single currency, known as Euro, within their economies.
8 Pages(2000 words)Essay
Costs of benefits
The benefits are mostly related to the investments that the organizations do in the form of training their employees and investing in other
2 Pages(500 words)Essay
Discussing the benefits and costs of such a metallic monetary system for an aspiring new country
Among the advantages include its being durable, more portable and promote trade. For example, the disadvantages include valuable metals limited supply, metallic coins are heavy to carry, and their
2 Pages(500 words)Essay
What are the main benefits and costs of monetary union What are the main criteria for the optimality of a currency area
There are some benefits and some cost in joining such kind of union. Below are the important costs and benefits of monetary union: (University of North Carolina, 2009). One of the important benefits of monetary union is that it eliminate exchange rate
2 Pages(500 words)Essay
Let us find you another Essay on topic What have been the costs and benefits of Hong Kongs Currency Board System since 1983 for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us