Hong Kong’s Link to the US Dollar
Origins and Evolution
John Greenwood
November 2007
320 pages
6" x 9"
HK$220 (Hong Kong, Macau, Mainland China, and Taiwan only)
US$30 (Other Countries)
Paperback 978-988-8083-67-1
Hardback 978-962-209-890-9
This edition is no longer available.

Hong Kong’s Link to the US Dollar covers the origins of the city’s currency crisis in 1983, the initial resolution of the crisis by creation of a traditional currency board, the subsequent problems leading to the Asian financial crisis of 1997–98, and the later reforms. The epilogue traces Hong Kong’s monetary developments between 1990 and 2005.

This valuable compendium of articles, originally written in the bimonthly journal Asian Monetary Monitor during the years 1981–89, includes the key article that formed the basis for the Hong Kong government’s decision in 1983 to peg the currency to the US$, as well as other important documents of historical record.

The main contribution of the book is its detailed monetary analysis of Hong Kong’s unique financial system before and after the currency crisis of 1983. The book explains the collapse of the floating HK$ under the pressure of capital outflows during the Sino-British negotiations (1982–84) over the future of Hong Kong, the fascinating story of the introduction of the linked rate system pegging the Hong Kong dollar to the US dollar, and the subsequent gradual process of reform and refinement of the currency board mechanism (1988–2005). Each chapter is preceded by an introductory narrative that puts the analysis in its historical context and places the economic argument in perspective. Hong Kong’s Link to the US Dollar will enable readers to obtain a comprehensive picture of why the linked rate system was put in place, how it works, and why it has been strengthened over the years.

John Greenwood OBE is Chief Economist of INVESCO plc. A graduate of Edinburgh University, he did economic research at Tokyo University and was a visiting research fellow at the Bank of Japan (1970–74). From 1974 he was Chief Economist with GT Management plc, based initially in Hong Kong and later in San Francisco. As editor of Asian Monetary Monitor he was alone in pointing out the flaws in Hong Kong’s monetary system in the years leading up to the currency crisis of 1983, and is well-known as the architect of the linked rate between the HK$ and US$ that has been operating ever since. Mr. Greenwood was a director of the Hong Kong Futures Exchange Clearing Corporation (1987–91) and council member the Stock Exchange of Hong Kong (1992–93). An economic adviser to the Hong Kong Government (1992–93), he has been a member of the Committee on Currency Board Operations of the Hong Kong Monetary Authority since 1998. He is also a member of the Shadow Monetary Policy Committee in England. Mr. Greenwood is a director of INVESCO Asia Ltd in Hong Kong, INVESCO Asset Management Singapore Ltd, and the Hong Kong Association in London.


“A magisterial treatment of how Hong Kong lost and re-established stable money by the principal intellectual architect of its currency board regime. Greenwood, a monetary master craftsman, has produced what is destined to become both the standard reference work on Hong Kong’s modern monetary system and essential reading for students of monetary economics and economic development.” —Steve H. Hanke, professor of applied economics, The Johns Hopkins University

“A great book describing how Hong Kong surmounted the great currency crisis of 1982–83, and then rationalizes why and how the Hong Kong Monetary Authority subsequently evolved from a pure currency board to a near central bank. The definitive historical record by the most consummately influential outsider.” —Ronald I. McKinnon, William D. Eberle Professor of International Economics, Stanford University

“John Greenwood has written the definitive account of Hong Kong’s currency system, from the early colonial currency board system, to the floating exchange rate system from 1974 onwards, to its breakdown in the wake of Hong Kong’s currency crisis of 1983, to the adoption and operation of the new exchange rate mechanism in October 1983, highlighting its strengths and weaknesses. This book is must reading for anyone interested in the operation of currency boards and, in particular, with an interest in Hong Kong.” —Alvin Rabushka, David and Joan Traitel Senior Fellow at the Hoover Institution at Stanford University

“There is probably no one else so well placed by history, and so well served by intellect, as John Greenwood to describe the events which led to Hong Kong’s uniquely successful experiment of pegging its currency to the US dollar. His comprehensive history of Hong Kong’s monetary crisis and its resolution offers the privileged insights of an active participant, as he describes process by which his proposal for a peg was adopted. Further, his continued involvement informs his analysis of its success through the economic shocks of the ensuring years.” —David Hale, economist, Chicago