Introduction

 I am aware of the possible market sensitivity of my openly raising the subject of this paper, in view of my past and long involvement in monetary and financial affairs in Hong Kong in an official capacity. I am fortunate to have had the opportunity to be engaged in policy making and operation of the monetary and financial systems of Hong Kong for a total of twenty-seven years.

This started when I was posted to the Monetary Affairs Branch of the Government Secretariat as a Principal Assistant Secretary at around the same time as Margaret Thatcher visited Beijing, met Deng Xiaoping and raised the future of Hong Kong in 1982. When the monetary crisis broke in September 1983, I played a supporting role in putting together some kind of a fixed exchange rate “system” and implementing it on Monday 17 October 1983. I was also fortunate to have had the opportunity of uninterruptedly nursing the system since for over a quarter of a century, modifying and strengthening it over the years until I retired in September 2009 as Chief Executive of the Hong Kong Monetary Authority (HKMA) – the central banking institution that I had a hand in establishing in April 1993. The fixed exchange rate, which has become the focus of the monetary system of Hong Kong, has survived the highly sensitive period of political transition, and two most severe financial crises in recent world history. It has served Hong Kong well for nearly thirty years.

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Joseph Yam is professor, Institute of Global Economics and Finance of the Chinese University of Hong Kong and former chief executive of the Hong Kong Monetary Authority