Hong Kong initially pegged to the dollar but then allowed its currency to float, with no real monetary policy. Speculative pressures in the early 1980s led to the introduction of a currency board, within which there is some limited scope for monetary and macroprudential policy, and which provides currency and financial stability.
| Years | Targets and attainment | Classification |
| 1974 | currency pegged to USD with +/- 2.25% margins | full exchange rate targeting LERT |
| 1975-83 | currency floating; some financial markets developed and active but monetary instruments underdeveloped and little monetary policy (no central bank) | unstructured discretion UD |
| 1984-2023 | currency board on USD from October 1983, under Hong Kong Monetary Authority established April 1993; various improvements over time in currency board arrangements and in monetary control, including establishment of ‘strong-side convertibility undertaking’ as well as weak side (i.e. upper as well as lower band) in 2005; monetary policy operates partly via liquidity facility/discount window on bank liquidity and interbank interest rates, later also through transactions in Exchange Fund bills and notes; limited lender of last resort function; major support for stock market in August 1998; active response to GFC, later use of macroprudential policies; as of 2017 Hong Kong business cycle remains more closely synchronised with US than with Mainland China; 2014-20 social unrest and political tensions; strong fiscal response to Covid-19; growing financial linkages to Mainland China | augmented currency board ACB |
Selected IMF references: RED 1991 pp45-8, 57-64; RED 1993 pp22-7; RED 1997 pp55-7, 68-9; SR 2000 pp19, 25-6; SI 2005 pp17-20; SR 2006 p8; SR December 2007 pp1-14; SR 2008 pp11-12; SR 2016 p27; SI 2017 pp52-5; SR 2018 pp21-2, 38; SR 2019 pp28-31; SR 2022 pp34-5; SR 2023 pp7, 34.
Additional sources: HKMA (2013); HKMA website; Wolf et al (2008); HKMA (2024, pp77-81).
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Monetary Policy Frameworks 