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.
| 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 |
| 1984-2017 | currency board on USD; various improvements over time in currency board arrangements and in monetary control, including establishment of Hong Kong Monetary Authority 1993 and ‘strong-side convertibility undertaking’ from 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 Global Financial Crisis, later use of macroprudential policies; Hong Kong business cycle remains more closely synchronised with US than with 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 2018 pp52-5.
Additional sources: HKMA (2013); HKMA website; Wolf et al (2008).
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Monetary Policy Frameworks 