Hong Kong Monetary Authority (HKMA)

What is the Hong Kong Monetary Authority (HKMA)

Laid out in 1993, the Hong Kong Monetary Authority (HKMA) acts to control inflation and keep up with the stability of the Hong Kong dollar (HKD) and of the banking sector through its monetary policy. The HKMA joins the HKD to the U.S. dollar to assist the HKD with keeping a stable value.

Understanding the Hong Kong Monetary Authority (HKMA)

Hong Kong is a key finance capital for the People's Republic of China, and it's a place for multinational companies to set up operations. As a Special Administrative Region of the People's Republic of China, Hong Kong is an autonomous domain with its own currency and an annual nominal GDP of more than $365 billion starting around 2019. The HKMA acts as a de facto central bank for the region.

The HKMA keeps a sovereign wealth fund called the Hong Kong Monetary Authority Investment Portfolio. The HKMA is a member of the Executives' Meeting of East Asia-Pacific Central Banks alongside the Reserve Bank of Australia, the [People's Bank of China](/people groups bank-china-pboc), the Bank of Japan, and seven other central banks.

HKMA Responsibilities

One of the key jobs of the HKMA is keeping up with currency stability. The Linked Exchange Rate system is designed to balance out the exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD). The fixed-rate exchange system seeks to keep up with parity with the USD inside a tight reach, permitting HKD note-giving banks to issue new banknotes just when they deposit an equivalent value of U.S. dollars with the authority. The exchange rate will in general change inside a set reach. The HKMA has one of the world's biggest currency reserves according to its economy.

The authority operates the Exchange Fund. The fund's primary objective "to influence, either straightforwardly or in a roundabout way, the exchange value of the currency of Hong Kong." The Fund may likewise be utilized to keep up with the stability and integrity of Hong Kong's monetary and financial systems to assist with keeping up with Hong Kong as an international financial center.

The HKMA is accused of advancing the stability and integrity of the financial system, including the banking system. One of the key ways the authority does this is by buying HKD to keep up with parity with the dollar inside the stated reach. Starting around 2021, the fixed-rate system has kept interest rates super low in Hong Kong, empowering expansion and investment. In any case, low-interest rates have likewise filled a record home price boom an in the area, making affordability issues.