Financial Structure and Monetary Policy in Hong Kong

  • S. Y. Lee
  • Y. C. Jao


The first country study in this book is that of Hong Kong. Although the time frame is generally the post-war period, our attention is mainly focused on 1970–9.1 The decade was one of the most turbulent in international economic history, characterised by a quick succession of economic and financial crises that reflected deep-seated maladjustments in the world economic structure. It also witnessed China’s dramatic reorientation of foreign and economic policies, which was bound to have a profound influence on Hong Kong’s future. Hong Kong itself, a tiny territory highly dependent on external trade, has emerged since 1970 as a leading financial centre for the whole Asian-Pacific region, apart from being already established as a free port and manufacturing base of considerable importance.


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Notes and References

  1. 1.
    Readers interested in Hong Kong’s banking and monetary developments before 1973 are referred to Y. C. Jao, Banking and Currency in Hong Kong: A Study of Postwar Financial Development (London, 1974), and the extensive bibliography therein.CrossRefGoogle Scholar
  2. 19.
    Thus we are unable to use the financial interrelations ratio (FIR), defined as the value of all financial assets divided by the value of national wealth, as described in R. W. Goldsmith, Financial Structure and Development (New Haven, 1969).Google Scholar
  3. 25.
    For earlier discussions of the currency system, see F. H. H. King, Money in British East Asia (London, 1957), Chapter 5;Google Scholar
  4. T. B. Lin, Monetary Behaviour under the Sterling Exchange Standard: Hong Kong as a Case Study (Hong Kong, 1971):Google Scholar
  5. T. B. Lin, Das monetäre System und das Vehalten des Angebotes an und der Nachfrage nach Geld in Hong Kong (Freiburg, 1970).Google Scholar
  6. 30.
    This conceptual distinction was first made in J. G. Gurley and E. S. Shaw, Money in a Theory of Finance (Washington, 1960).Google Scholar
  7. 31.
    For an explanation of the methodology, see M. Friedman and A. J. Schwartz, A Monetary History of the United States, 1867–1960 (Princeton, 1963), Appendix B.Google Scholar
  8. 34.
    For studies of income and interest elasticities of the demand for money during the period 1955–73, see T. B. Lin, Monetary Behaviour under the Sterling Exchange Standard (Hong Kong, 1971), pp. 18–29,Google Scholar
  9. and Y. P. Ho, ‘The Demand for Money in Hong Kong, 1961–73: Some Empirical Estimates’, New Asia College Academic Journal, Vol. XVII, 1975, pp. 285–305.Google Scholar
  10. 35.
    See P. Cagan, The Demand for Currency Relative to Total Money Supply (New York, 1958);Google Scholar
  11. J. D. Khazzoom, The Currency Ratio in Developing Countries (New York, 1966).Google Scholar
  12. 42.
    For a seminal discussion of the problem, see A. A. Alchian and B. Klein, ‘On a Correct Measure of Inflation’, Journal of Money Credit and Banking, Vol. 5, 1973, pp. 173–91.CrossRefGoogle Scholar
  13. 44.
    See for example, M. Friedman, The Optimum Quantity of Money (Chicago, 1969), Chapters 9–12.Google Scholar
  14. 45.
    For full details, see Y. C. Jao, ‘Inflation and Monetary Policy in Hong Kong’, Hong Kong Economic Journal, September 1979, Vol. III, No. 6, pp. 20–2.Google Scholar
  15. 54.
    For a useful recent survey, See J. R. Artus and A. D. Crockett, Floating Exchange Rates and the Need for Surveillance, Princeton, Essay s in International Finance, No. 127, May 1978.Google Scholar

Copyright information

© S.Y. Lee and Y.C. Jao 1982

Authors and Affiliations

  • S. Y. Lee
    • 1
  • Y. C. Jao
    • 2
  1. 1.National University of SingaporeSingapore
  2. 2.University of Hong KongChina

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