Hong Kong SAR is well known as one of the few economies to operate a fonn of currency board as the basis of its monetary system. This system arose out of colonial status and has been retained except fora period of floating from 1975-83 to the present day, with some amendments. This article explores the evolution of the Exchange Fund during a period of global exchange rate instability showing that the abandonment of the monetary anchor in 1975 was part of a series of innovations to the use of the Fund as the colonial government sought to manage the exchange rate risks posed by the collapse of the Bretton Woods system.
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