1996 Fiscal Year Final Research Report Summary
A STUDY ON THE HONG KONG MONETARY SYSTEM BEFORE THE RESTORATION TO CHINA
| Project/Area Number |
07630089
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Public finance/Monetary economics
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| Research Institution | HOSEI UNIVERSITY |
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Principal Investigator |
YOKOUCHI Masao HOSEI UNIVERSITY,FACULTY OF BUSINESS,PROFESSOR, 経営学部, 教授 (20166870)
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| Project Period (FY) |
1995 – 1996
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| Keywords | Hong Kong / International Finance / Hong Kong Monetary Authority / Exchange Fund / Linked Rate System / Three-tier Banking System / Interbank Market / Restoration to China |
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| Research Abstract |
The first purpose of this study is to examine the development of the Hong Kong monetary system before the restoration to China in July 1997, and next to forecast the condition after 1997. Three findings came out in this study.
First, though exchange rate system in Hong Kong is a fixed exchange rate system called the "linked rate system", not a flexible exchange rate system advanced countries now adapting, the operation of this system is very sound from the function of" arbitrage and competition". In recent years, central banking functions, for example open market operation procedures, have been added to the Hong Kong Monetary Authority which manage the exchange rate system.
Second, Hong Kong banking system is called three-tier system consisted of Licensed Banks, Restricted License Banks, and Deposit-taking companies. In the money market, especially interbank market, the activity of Japanese banks is very remarkable. Japanese banks, however, devote outward business with Japan and their share of internal business within Hong Kong is unimportant. Because of the banking regulation in Japan, the Hong Kong branches of Japanese banks borrow fund from Japan and place this to Japan. This is a roundabout transaction taking advantage of Hong Kong's free money market.
Third, there is a very close cooperation between the Hong Kong Monetary Authority and the People's Bank of China for the stability of the Hong Kong monetary system and Hong Kong Dollar. This is because of the defense on the restoration shock to monetary affairs. The harmony of both monetary authorities is starting before the restoration.
Next problem is so to make an analysis of this cooperation in the context of "one country, two currencies" which is an analogy of the idea of Basic Law, that is "one country, two systems". It is necessary for this great experiment that the both monetary authorities cooperete with each other.
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Research Products
(2 results)
