The central bank has gone public with its hands-off position on Hong Kong’s US dollar peg, stating for the first time that it will “respect” the city’s decision on whether to retain the currency regime, the Hong Kong Economic Journal reported Thursday.
The announcement comes just weeks after the State Council released a white paper underscoring Beijing’s ultimate authority over the implementation of the “one country, two systems” regime in Hong Kong.
In one of several media briefings for Beijing-based Hong Kong journalists to discuss the paper, Zhu Juan, deputy director general of foreign affairs office, said the peg played an “irreplaceable” role in financial crises. According to the Basic Law, Zhu said, Hong Kong can choose its currency system, irrespective of the mainland economy’s growing influence over the city.
The Monetary Authority said the government has a firm position on the peg and does not plan to change it. The peg is a cornerstone of financial stability for Hong Kong’s open economy.
Francis Lui, economics professor at Hong Kong University of Science and Technology, said the briefings could be an attempt to counter discontent in Hong Kong generated by the white paper.
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