Abstract

http://ssrn.com/abstract=2207027
 


 



The Hong Kong Linked Rate Mechanism: Monetary Lessons for Economic Development


Christopher L. Culp


Compass Lexecon; Risk Management Consulting Services, Inc.; Johns Hopkins University - Institute for Applied Economics, Global Health, and Study of Business Enterprise; University of Bern - Institute for Financial Management

Steve H. Hanke


Johns Hopkins University - Department of Economics

June 1, 1993

Johns Hopkins University Department of Economics Working Paper

Abstract:     
A currency board is a monetary institution that issues notes and coins which are fully convertible into a reserve currency at a fixed rate on demand. Reserves are equal to 100 per cent, or slightly more, of a board’s notes and coins. There have been over seventy currency boards and all have maintained convertibility, even during civil wars. Although successful, currency boards fell victim to changing economic fashions, and most were replaced by central banks after World War II. Hong Kong has one of the few remaining currency board systems, although that system remains largely unknown, even to monetary specialists. An analysis of the evolution and working of Hong Kong’s system is presented in this text. Strengths and weaknesses of the current system are discussed, and measures to correct weaknesses are suggested. The desirability of the currency board system for developing countries, particularly those making the transformation from socialism to capitalism, is also examined.

Number of Pages in PDF File: 57

Keywords: Steve Hanke, Christopher Culp, Hong Kong Dollar, Linked Exchange Rate Mechanism, Johns Hopkins Economics

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Date posted: January 26, 2013  

Suggested Citation

Culp, Christopher L. and Hanke, Steve H., The Hong Kong Linked Rate Mechanism: Monetary Lessons for Economic Development (June 1, 1993). Johns Hopkins University Department of Economics Working Paper. Available at SSRN: http://ssrn.com/abstract=2207027

Contact Information

Christopher L. Culp
Compass Lexecon ( email )
332 South Michigan Avenue
Suite 1300
Chicago, IL 60604
United States
Risk Management Consulting Services, Inc. ( email )
25 E Superior St
#1806
Chicago, IL 60611
United States
HOME PAGE: http://www.rmcsinc.com
Johns Hopkins University - Institute for Applied Economics, Global Health, and Study of Business Enterprise ( email )
3400 N. Charles Street
Baltimore, MD 21218
United States
University of Bern - Institute for Financial Management ( email )
Engehaldenstrasse 4
Bern, CH-3012
Switzerland
HOME PAGE: http://cmslive3.unibe.ch/unibe/wiso/ifm/content/index_ger.html
Steve H. Hanke (Contact Author)
Johns Hopkins University - Department of Economics ( email )
3400 Charles Street
Baltimore, MD 21218-2685
United States
410-516-7183 (Phone)
410-516-8996 (Fax)
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