Why can Hong Kong dollars and Macau yuan be issued by multiple banks?

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Why is the RMB only issued by the Central Bank (People's Bank) and Hong Kong dollars can be issued by multiple banks (Bank of China, Standard Chartered Bank, etc.)? thanks

2 thoughts on “Why can Hong Kong dollars and Macau yuan be issued by multiple banks?”

  1. Wilbur

    Hong Kong and Macau adopt the monetary issuance bureau system, which is different from China's central bank system.

    The exchange rate system implemented in Hong Kong now, its academic name is the currency issuance bureau system (). This system is different from the familiar linked exchange rate () system. It does not require the central bank to make intervention in the foreign exchange market, which can keep the exchange rate within the predetermined level.
    If according to the currency issuance bureau system, the currency foundation (the sum of the total amount of Hong Kong dollar settlement accounts opened by the Hong Kong dollar and the bank's account of the HKMA) needs to be provided by the US dollar at a fixed exchange rate. Hong Kong's banknote issuance banks must hand over the same value (that is, HK $ 7.8) to foreign exchange reserve funds in exchange for liability certificates in order to issue the banknotes for the face value for comprehensive reserve support.
    Is when the HKMA is passively buying or selling Hong Kong dollars from the bank, the US dollar reserves held by the HKMA will increase or decrease accordingly, and the Hong Kong dollar currency foundation will change accordingly. The expansion or contraction of the currency foundation will lead to a decline or rise in interest rates, that is, the currency status will automatically adjust the exchange rate according to the inflow or outflow of funds, so that the exchange rate can remain stable throughout the process. This is a process of automatic adjustment, and the HKMA does not need to make any decisions as appropriate.
    This system has been effective since the implementation of the above -mentioned monetary issuance bureau system since 1983. Although it has experienced the global stock market disaster in 1987, the Eu currency exchange rate mechanism in 1992, the 1994 Mexican peso crisis, and the Asian financial crisis in 1998, the Hong Kong dollar exchange rate can still remain stable.

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