Honk Kong Monetary Authority


The Hong Kong Monetary Authority is a government controlled financial institution, which acts as the Central Bank of Hong Kong. It came in to being after a merger between the "Office of the Exchange Fund" and the "Office of the Commissioner of Banking". The currency is the Hong Kong Dollar or HKD in its shortened form.

The Hong Kong Dollar is the only legal tender that can be issued in the country and comes in the form of $10, $20, $50, $100, $500, $1,000 bank notes and 10¢, 20¢, 50¢, $1, $2, $5, $10 coins. The dollar is subdivided into 100 cents and 1000 mils. The issuing of bank notes and coins is not the responsibility of the HKMA and is delegated to either the Hong Kong and Shanghai Banking Corporation or the Standard Chartered Bank and the Bank of China.

The main aim of the Honk Kong Monetary Authority is to keep the Hong Kong currency and exchange rate stable, and to ensure the stability of the banking system. It does this through monetary policy. Currently its inflation rate is on target at 2.2%.

The HKMA uses what is known as a linked exchange rate system, where it links its own currency exchange rate to another in order to remain stable. It currently links to the US Dollar.
Another notable feature of its stability policy is the Certificate of Indebtedness, where issuing banks are required to submit US dollars (at HK$7.80=US$1) to the HKMA for the Exchange Fund.

The Exchange Fund holds the region’s and government’s assets, including their $160 Billion foreign exchange reserves. This puts them 9th in the world for the amount they hold in reserve, with the whole Country of China leading the pack.

To ensure banking stability the HKMA uses a three tiered system called the "Banking System and Supervision", where licensed banks, restricted license banks, deposit-taking companies populate the legal institutions in the region.




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