Linking and Making Anchor Currency:Analysis of the Evolution Trend of the LERS from the Perspective of the Evolution Tradition of Hong Kong's Monetary System
The linked exchange rate system(LERS)is the cornerstone of Hong Kong's financial system,and its evolution trend is worth studying,which requires reviewing and summarizing the evolution process and tradition of Hong Kong's monetary system.The key issue is how to link the Hong Kong currency to its anchor currency.The core traditional approach is to anchor the Hong Kong currency to the top currency of the currency pyramid in the manner of the currency board,and to find a new anchor currency and link the Hong Kong currency with it when the old anchor currency declines.This traditional approach is the product of the historical structure of Hong Kong's monetary system.From the perspective of international political economy,the formation and evolution of Hong Kong's monetary system mainly stem from three structural characteristics:The hierarchical and hegemonic nature of the international monetary system;The outward-looking and flexible nature of Hong Kong's industrial structure;The bias and pressure-bearing nature of Hong Kong's political system.In the short to medium term,most structural characteristics are difficult to change,and only some structural characteristics tend to weaken.Based on this,looking forward to the evolution trend of the LERS,we can come to four conclusions:The LERS with the core principle of pegging to the US dollar remains the most appropriate arrangement for Hong Kong;The most likely point of change is when the hegemonic position of the US dollar is replaced,and the risk of change triggered by the resonance of external financial shocks and Hong Kong's internal problems should not be ignored;The most likely way of change is still to passively link the Hong Kong currency to the top-level currency,with the free flow of Hong Kong currency being a necessary option;Currency issuance system dominated by private commercial banks and supplemented by the government will continue.Compared with how to anchor the Hong Kong currency to the top currency,how to participate in making a new anchor currency is more critical and challenging against the backdrop of changes in the international political and economic system.
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