Hong Kong’s Money

Since 1983 Hong Kong has pegged its currency to the US dollar through a currency board system that is unique among the world’s advanced economies. In this first comprehensive book about Hong Kong’s monetary system, Tony Latter draws on his considerable experience in central banking generally, and with the Hong Kong Monetary Authority in particular, to give a detailed account of how the system operates; why it was introduced; what are the important differences from other monetary regimes; and how it has performed.

After a brief overview of Hong Kong’s currency board system, two chapters explain the key features of mainstream monetary policy as practised in most economies and how the currency board differs. Then three chapters deal with the history of money in Hong Kong from the mid-1930s, describing the salient events and changes of the period up to the 1983 crisis and the consequent re-adoption of the currency board. Descriptions of the functioning of the system after 1983 and its evolution to the present day then follow. The book concludes with assessments of the performance of the currency board since 1983 and of the Hong Kong economy more widely.

This book is designed both to inform lay readers and to provide substance for monetary economists. Given the key role of monetary policy in providing a stable foundation for a strong economy, the book is of importance for all business people in Hong Kong, while the more analytical sections provide essential reading for all students of economics.

Tony Latter worked for many years at the Bank of England, with spells at the Bank for International Settlements in Basel and the Organisation for Economic Cooperation and Development in Paris, and the National Bank of Ukraine. His association with Hong Kong dates back to 1982, when he began a three-year term as Deputy Secretary for Monetary Affairs; he was responsible for initiating the re-adoption of the currency board in 1983 and for ensuring its success in the early stages. In 1999 he returned to Hong Kong as Deputy Chief Executive of the Hong Kong Monetary Authority. In 2003 he moved to the University of Hong Kong as a visiting professor of economics. Having since relinquished full-time duties there, he remains a senior research fellow of the Hong Kong Institute of Economics and Business Strategy.

“Tony Latter has written a rigorous and insightful, yet lucid and broadly accessible, account of the history, evolution and workings of Hong Kong’s monetary system. Readers of this first-rate book will understand why Hong Kong’s currency board reliably delivers stable money.” —Steve H. Hanke, Professor of Applied Economics, The Johns Hopkins University