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Asian Monetary Monitor: Vol. 7 No. 6 November–December 1983 Asian Monetary Monitor: Vol. 7 No. 6 November–December 1983
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Introduction Introduction
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1. A Monetary Analysis of the Collapse of the Hong Kong Dollar 1. A Monetary Analysis of the Collapse of the Hong Kong Dollar
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(A) An Inherently Unstable System (A) An Inherently Unstable System
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(B) Failure of the “Interest Rate Weapon” (B) Failure of the “Interest Rate Weapon”
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(C) Why the Interest Rate Weapon Failed (C) Why the Interest Rate Weapon Failed
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2. A Stopgap Announcement 2. A Stopgap Announcement
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3. Theoretical Elements of the Stabilisation Plan 3. Theoretical Elements of the Stabilisation Plan
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(A) The Choice of Monetary Standard (A) The Choice of Monetary Standard
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(B) Partial Convertibility or Full Convertibility (B) Partial Convertibility or Full Convertibility
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(C) The Choice of Currency (C) The Choice of Currency
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(D) The Choice of Exchange Rate (D) The Choice of Exchange Rate
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4. Institutional Arrangements Of The New Scheme 4. Institutional Arrangements Of The New Scheme
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Appendix 6.1 Appendix 6.1
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Appendix 6.2 Appendix 6.2
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Appendix 6.3 Appendix 6.3
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Appendix 6.4 Appendix 6.4
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Appendix 6.5 Appendix 6.5
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Appendix 6.6 Appendix 6.6
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6 The Stabilisation of the Hong Kong Dollar: November–December 1983
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Published:November 2007
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Abstract
This chapter looks back on how the Hong Kong dollar was stabilised in October 1983. It presents a combination of theoretical discussion and historical narrative of the events between late September and mid-October when the new scheme was adopted. It examines why the “interest rate weapon” failed, and discusses some of the international political events (the Sino-British negotiations over the future of Hong Kong) and local dramas (the run on the supermarkets) that formed the background to the currency crisis. It also discusses important issues in currency stabilisation such as the choice of monetary standard, whether to adopt partial or full convertibility of HKD banknotes to USD at the fixed rate, the choice of currency, and the choice of exchange rate. It also outlines the institutional arrangements of the new scheme, anticipating some of the later discussion of the cash arbitrage process.
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