Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212665
Authors: 
Chen, Yu-Fu
Funke, Michael
Glanemann, Nicole
Year of Publication: 
2009
Series/Report no.: 
BOFIT Discussion Papers 21/2009
Abstract: 
Hong Kong's currency is pegged to the US dollar in a currency board arrangement. In autumn 2003, the Hong Kong dollar appreciated from close to 7.80 per US dollar to 7.70, as investors feared that the currency board would be abandoned. In the wake of this appreciation, the monetary authorities revamped the one-sided currency board mechanism into a symmetric two-sided system with a narrow exchange rate band. This paper reviews the characteristics of the new currency board arrangement and embeds a theoretical soft edge target zone model typifying many intermediate regimes, to explain the notable achievement of speculative peace and credibility since May 2005.
Subjects: 
currency board arrangement
target zone model
credibility
Hong Kong
JEL: 
C61
E42
F31
F32
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-997-3
Document Type: 
Working Paper

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