IMF - Hong Kong Resident Representative Site

Hong Kong Resident Representative Site
Resident Representative Office in Hong Kong Special Administrative Region

"This web page presents information about the work of the IMF in Hong Kong, including the activities of the IMF Resident Representative Office. Additional information can be found on the Hong Kong and IMF country page, including IMF reports and Executive Board documents that deal with Hong Kong..."

Source: http://www.imf.org/external/country/hkg/rr/index.htm

More: http://www.imf.org/external/country/HKG/index.htm

[Mrt: Since HK was not part of the IMF at the time Another wrote about BigTrader they (their CB) could go to public market and buy gold.

1984: The Sino-British Joint Declaration – an agreement to transfer sovereignty to the People's Republic of China in 1997 – was signed. It stipulated that Hong Kong would be governed as a special administrative region, retaining its laws and a high degree of autonomy for at least 50 years after the transfer. The Hong Kong Basic Law, which would serve as the constitutional document after the transfer, was ratified in 1990.

1997 July 1: handover of Hong Kong sovereignty

1997 October 9: Another: ...Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered... From that time, early 1997 LBMA was running full speed just to stay in one spot! In other words paper volume had to increase to the physical volume on a worldwide scale, and that was going to be one hell of a jump. It could not be hidden from the news any longer.
This was not far from the time that "Big Trader" said that "if gold drops below $370 the world would see trading volume like never before seen". The rest is history....

1998 July: Opening of the BIS Representative Office for Asia and the Pacific in Hong Kong SAR; Host Country Agreement with China...]


And from the year 1997 on IMF web page:

"...Resilient financial system is key to stability in Hong Kong, China
Under the Sino-British Joint Declaration of 1984, Hong Kong reverted to Chinese sovereignty on July 1, 1997, becoming the Hong Kong Special Administrative Region governed by the Basic Law of 1990. In monetary and financial affairs, the relationship between mainland China and Hong Kong will follow the principle of “one country, two currencies, two monetary systems, and two monetary authorities.” Article 109 of the Basic Law protects the status of Hong Kong as an international financial center. Article 110 ensures the independent formulation of monetary and financial policies and of regulation and supervision by the government of the Kong Kong Special Administrative Region. Article 111 stipulates that the legal tender will be the Hong Kong dollar, backed by a 100 percent reserve fund. Article 112 states that no foreign exchange controls will be applied. Article 113 specifies that the government of the Hong Kong Special Administrative Region will manage the Exchange Fund, primarily to maintain the value of the Hong Kong dollar.
Current market sentiment suggests that the transfer of sovereignty will not have any adverse effects on the Hong Kong dollar over the medium term. This sentiment reflects the generally positive assessment of the Hong Kong financial system and of the professional financial management practiced by the Hong Kong Monetary Authority.
The cornerstone of the financial system is the currency board linking the Hong Kong dollar to the US dollar. The Hong Kong Monetary Authority has successfully defended this arrangement, most recently in the summer and autumn of 1997. The first line of defense of the linked exchange rate is a large stock of reserves—$64 billion, or 40 percent of 1996 GDP— at the end of April 1997. The second line of defense is the ability of the Hong Kong Monetary Authority to raise short-term interest rates to make it expensive for speculators to obtain Hong Kong dollar credit. The banking system is highly capitalized and liquid, with very low levels of nonperforming loans, and it can tolerate increases in short-term interest rates. In 1996, to ensure the robustness of the financial system, the Hong Kong Monetary Authority established a real-time, gross settlement system and the Mortgage Corporation, which will help to isolate property finance from fluctuations in short-term interest rates.
The People’s Bank of China, which has reiterated its support for the present exchange rate arrangements in Hong Kong, has stated that it is prepared to use its own foreign exchange reserves to defend the Hong Kong dollar. The Hong Kong Monetary Authority has also established a swap facility with the People’s Bank of China to provide liquidity to its reserves in the event of an attack on the exchange rate, as it has with 10 other monetary authorities in the region...."

Source: http://www.imf.org/external/pubs/ft/fandd/1997/12/pdf/imfstaff.pdf