The linked exchange rate system between Hong Kong and China refers to the fixed exchange rate system between the Hong Kong dollar and other currencies, which is now linked to the US dollar.
history
In fact, the system of pegging the Hong Kong dollar to other currencies has a long history. From the Republic of China to June 1935, the silver standard and China silver dollar remained stable. From June 1935 to June 1972, the Hong Kong dollar was pegged to the British pound. 1 93565438+February to1967 165438+1October,1convertible HKD16,1967/kloc. From July of 1972 to June of 1974, 165438+ 10, peg the dollar and float freely.
From 65438 to the early 1980s, China and Hongkong were faced with future problems. In addition, the stock markets in China Mainland and Hong Kong plummeted, and people's confidence in the Hong Kong dollar was shaken, and the Hong Kong dollar continued to depreciate. 1 In September 1983, there was a Hong Kong dollar crisis, and the Hong Kong dollar pair1US dollar fell to an all-time low of 9.6 Hong Kong dollars. In order to save the financial systems of China and Hong Kong, China and Hong Kong announced the linked exchange rate system on 1983, 10 and 15. The Hong Kong dollar is pegged to the US dollar, and the exchange rate is set at 7.8 Hong Kong dollars 1 US dollar. Since then, it has stabilized and the linked exchange rate system has been implemented to this day.
The linked exchange rate system relies on the huge foreign exchange reserves of China and Hongkong.
1998 during the Asian financial turmoil, the Hong Kong dollar was heavily traded by international investors headed by Soros, which caused the exchange rate to fluctuate greatly. Later, the China Hong Kong Monetary Authority decided to invest funds to stabilize the exchange rate, so that the exchange rate of HK$ 7.8 1 USD could be maintained.
[Editor] Advantages and disadvantages
China and Hongkong are a city rather than a country with a high degree of economic freedom and an open economy. The linked exchange rate will help stabilize the economies of China Mainland and Hong Kong, reduce the impact of foreign economy and exchange rate fluctuations on China Mainland and Hong Kong, and also reduce the exchange rate risk of trade with China Mainland and Hong Kong and foreign investors' investment in China Mainland and Hong Kong. Since most raw materials, food and consumer goods in China and Hong Kong depend on imports, the linked exchange rate can also stabilize the prices in China and Hong Kong. However, the linked exchange rate makes it necessary for China mainland and Hongkong to adjust interest rates to keep in line with the United States, so the economic system is passive and fails to play the role of adjusting the economy and inflation/contraction with interest rates.
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Currency board
The Currency board (also translated as currency board system, paper currency board system, currency board system, currency board mechanism and currency board arrangement) is a fixed exchange rate system, that is, the exchange rate between local currency and specific foreign currency is fixed, and currency circulation is linked to foreign exchange reserves in strict accordance with the established exchange rate. If the linked currency is the US dollar, it can also be called "dollarization".
history
/kloc-At the end of the 9th century, Britain proposed and established the linked exchange rate system for the colonies. As a British colony, China Mainland and Hong Kong adopted this exchange rate system, which was pegged to the British pound, 1972 was abolished, 1983 was reopened, and pegged to the US dollar, with 7.8 Hong Kong dollars exchanged for 1 US dollar.
Typical examples are the linked exchange rate system of the Argentine peso against the US dollar and the linked exchange rate system of the Bulgarian lev against the German mark (now the euro).
[edit] feature
1. The commitment to the stability of the local currency exchange rate is stronger and the possibility of reversal is less.
[Edit] Advantages
1. stabilizes the currency and reduces the transaction cost in the market.
[edit] defect
* When the financial crisis came, the linked exchange rate system was considered very fragile. For example, Argentina abandoned the linked exchange rate system, greatly reduced the official exchange rate and introduced a dual exchange rate system in the ongoing turmoil of the economic crisis.
* The central bank adopts the linked exchange rate system, so it cannot play the role of lender of last resort, provide liquidity by loosening monetary policy, and directly finance troubled commercial banks. In fact, the decision-making power of monetary policy is handed over to the management authorities linked to the currency.
* In the case of pegging to the US dollar, the central bank lost three kinds of seigniorage income: local currency issuance, local currency demand growth and local currency stock interest.
[Editor] China's quasi-linked exchange rate system
China's former Prime Minister * * * used the international linked exchange rate system for reference, and put forward a method to determine the RMB exchange rate with the direct trading index as the anchor, which played a significant role in the stable development of the economy.
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2009-11-29 23: 31:45 Supplement:
Asian financial turmoil
The Asian financial crisis occurred from July 1997 to July 10, starting from Thailand, and then further affected the currencies, stock markets and other asset values of neighboring countries in Asia. Another name for this crisis is the Asian financial turmoil (common in China, Hongkong and Taiwan Province Province).
Affected countries
Indonesia, South Korea and Thailand are the countries most affected by the financial turmoil. Laos, Malaysia, the Philippines and China were also affected. People's Republic of China (PRC) and Singapore were relatively lightly affected (China implemented macro-control before the financial turmoil, and the losses were reduced because the market was not fully opened), while Taiwan Province Province was not affected on the surface, but the damage was delayed, so Taiwan Province Province faced the threat of "local financial turmoil" around 200 1. However, Japan is in its own long-term economic predicament after the collapse of the bubble economy, and it is not greatly affected by the financial turmoil.
After [edit]
2009-11-29 23: 32: 45 Supplement:
1At the end of 1994, RMB depreciated by 45%, and funds from various countries began to pour into China for investment, and funds from East Asian countries began to lose blood.
[Editor] Southeast Asia
From 65438 to 0997, Thailand's economy was weak, and many Southeast Asian countries such as Thailand, Malaysia and South Korea relied on short-term and medium-term foreign debts for a long time to maintain the balance of payments. The exchange rate is very high, and most countries maintain a fixed or linked exchange rate with the US dollar or a basket of currencies, which provides good hunting opportunities for international speculative funds. The quantum fund headed by the famous American speculator Soros took advantage of the situation to enter Thailand, starting with a large number of short selling of Thai baht, forcing Thailand to abandon the long-term fixed exchange rate linked to the US dollar and float freely, thus triggering an unprecedented crisis in Thailand's financial market. After that, the crisis quickly spread to all countries and regions with freely convertible currencies in Southeast Asia, and China and Hongkong became the most expensive currencies in Asia.
[Editor] Hongkong, China
2009-11-29 23: 33:12 supplement:
1997 10 When Soros swept Southeast Asia with funds, international speculators headed by Soros turned their attention to China and Hongkong. Although China and Hongkong were not as bad as Thailand at that time, there were many bubbles in real estate and stock market. Finally, Jones and Soros chose China and Hongkong as the main battlefields of the second wave. They believe that maintaining the linked exchange rate system is expensive, and that neither China nor the Hong Kong Special Administrative Region can survive, so they began to actively study it and quickly launched an offensive. In June, 1997, 1 1, hedge funds began to attack Hong Kong dollars for more than ten months. Macro hedge funds joined hands to create markets in foreign exchange, stock market and futures market, and launched a three-dimensional attack on the Hong Kong dollar in all directions: first, they sold a large number of cash Hong Kong dollars for US dollars, while shorting Hong Kong stocks in the stock market, and then sold a large number of futures contracts in the Hang Seng Index futures market. However, under the resistance of the China SAR, the three attacks failed to destroy the Hong Kong dollar.
Supplementary explanation:
1997, when China and Hong Kong attacked Soros's financial attack, they first used1500 million dollars out of 90 billion reserves, resulting in Soros's direct loss of more than 2 billion dollars in the battlefield in Hong Kong, China, and indirect loss of about1500 million dollars.
2009-11-29 23: 34:15 supplement:
1On August 5th, 998, with the cooperation of the U.S. stock market crash and the yen exchange rate crash, hedge funds began to launch the fourth impact on the Hong Kong dollar. A battle that almost brought down the financial markets and linked exchange rate system in China and Hongkong started. Quantum Fund and Tiger Fund launched an offensive and began to speculate in Hong Kong dollars. At first, they borrowed a lot of Hong Kong dollars from banks, sold them in the market, exchanged them for dollars to earn interest, and sold a lot of Hong Kong stock futures. The former will lead to a sharp rise in interest rates, leading to a decline in the stock market, thus making profits in the futures market;
2009-11-29 23: 34: 36 Supplement:
At the same time, once the Hong Kong dollar falls, they can also make profits in the foreign exchange market, killing two birds with one stone. China and Hong Kong SAR raised interest rates by 300%, and overnight rate used nearly HK$ 654.38+02 billion (about US$ 654.38+05 billion) in foreign exchange reserves to buy Hong Kong stocks. As a result, speculators were forced to close their positions at a high price on August 28, and suffered serious losses. In addition, they were frustrated in Russia and Malaysia at the same time and finally retreated. In this battle, China and Hong Kong invested a large amount of foreign exchange reserves in the stock market, which once occupied 7% of the market value of Hong Kong stocks and even became major shareholders of some companies. Once the stock market falls, the linked exchange rate may collapse. Therefore, by June 1999 1 1, the Hong Kong stocks purchased by the Government will be listed on TraHK and sold back to the market in batches.
2009-11-29 23: 34: 54 Supplement:
[editor] influence
The crisis forced all the major currencies in Southeast Asia to depreciate sharply in a short time, and the collapse of the monetary system and stock market in Southeast Asian countries, as well as the huge pressure of foreign capital withdrawal and domestic inflation caused by it, cast a shadow over the economic development of this region.
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