The Hong Kong SAR has consistently pursued a prudent fiscal policy. Substantial fiscal reserves have insulated government funding from the volatility of financial market conditions, and have buffered the economy against shocks, particularly in the absence of a discretionary monetary policy....

This note reviews the recent experience of the Hong Kong Monetary Authority's foreign exchange market operations and illustrates why such operations are a passive and mechanical process under the currency board arrangement. This note also discusses whether Hong Kong is well prepared for capital...

This paper documents the major policy reforms to Hong Kong's Linked Exchange Rate System (LERS) that have enabled it to evolve into the highly credible, efficient, and transparent system it is today. It discusses the operating mechanism of the system in adjusting capital flows, and the role the...

As property market bubbles could have huge repercussions on financial and macroeconomic stability, flexible policies to lean against the wind are vital. Hong Kong SAR has long relied on macroprudential measures, particularly caps on loan-tovalue (LTV) ratios, to contain banking sector risks that...