Finance Report

4901 WordsMar 26, 201520 Pages
Essay Assignment Cover Sheet Assignment Topic:Pegging HKD to USD vs. pegging HKD to CNY | Course: International Financial Management Course Code: EF 5143 Instructor: Dr. Du Du Student Name and SID: Chen Shu, 53684900 Li Xing, 53680125 Lin Lin, 53834131 Zhang Rui, 95651546 Abstract Hong Kong is one of financial centers in the world, which has implied the linked exchange rate system since 1983. As the implementation of the linked exchange rate system, the Hong Kong monetary authority, in order to adapt to the change of the global economic situation, has implemented many of the currency reform measures to make its content gradually improve. With the effectiveness of its linked exchange rate system, Hong Kong has weathered a series of wind and rain over the last 30 years and successfully resisted external shocks. However, 30 years later, both inside and outside environment compared with the system at the beginning of the implementation, great changes have taken place in Hong Kong. Compared to the economic ties with the United States, the trade and personnel exchanges experience close interactivity between Hong Kong and mainland China, for instance, the degree of economic integration is much deeper and the dependence of Hong Kong on mainland is becoming stronger. Therefore, as the changes of time, does the dollar linked system still have more advantages than its defects? Will the Hong Kong monetary authority have other better choices? In order to resolve the above questions, our report divided into four main parts to analyze and discuss this issue. First, we discussed the reasons for choosing dollar-linked and also the disadvantages of pegging HKD to USD that we assessed both in theory and fact. Then, we focused on the potential benefits of HKD pegged with CNY before we analyzed the disadvantages. Later, we talked about a larger issue –

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