HONG KONG MONETARY AUTHORITY Annual Report 1996
HONG KONG MONETARY AUTHORITY
CHIEF EXECUTIVE'S STATEMENT
In these last months before the resumption of sovereignty over Hong Kong by China, it is time to take stock of the work of the Hong Kong Monetary Authority (HKMA) since its establishment in 1993, and to look at these last four years in the context of our achievements to date and the challenges that lie ahead.
If we look back at the decade leading up to the establishment of the HKMA, we see a series of major reforms in monetary management and banking supervision that strengthened monetary and banking stability in Hong Kong.
The HKMA evolved as part of these reform measures, and it continues to exercise fully its mandate to maintain currency stability within the framework of the linked exchange rate system, to promote the safety and stability of the banking system, as well as the efficiency, integrity and development of the financial system. 1996 witnessed major steps in this direction, marking also the growing recognition of Hong Kong in the international financial community.
During 1996, the HKMA was increasingly involved in international financial affairs, in measures to increase regional and international monetary co-operation, and in the consolidation of the post-1997 monetary arrangements which can be summarised as "one country, two currencies, two monetary systems and two monetary authorities" that are mutually independent.
CURRENCY STABILITY
Maintaining exchange rate stability under the linked exchange rate system is the overriding monetary objective of the HKMA. This last year, notwithstanding the volatility in the global foreign exchange market, the Hong Kong dollar remained stable on the strong side of the linked rate of 7.80 against the US dollar, moving between 7.73-7.74.
In 1996, we signed three more bilateral repurchase agreements with other central banks in the region, bringing the total to eight, including an agreement with the People's Bank of China.