Chapter 5
Currency and Banking
At the time of Hong Kong's foundation in 1841, China's currency was based on uncoined silver but the normal unit for foreign trade was the Spanish or Mexican dollar. A proclamation of 1842 declared the first legal tender to be the Mexican or "other Republican dollars". Until 1862, however, the Government kept its accounts in sterling, and there were several unsuccessful attempts in this period to change the basis of the Colony's money from silver to gold.
A Hong Kong mint producing a Hong Kong equivalent of the Mexican dollar was set up in 1866, but the new coin was not popular and the mint was closed in 1868, the machinery being sold to establish the first modern mint in Japan.
In 1895 in pursuance of Her Majesty's Order in Council dated 2nd February in that year a British trade dollar, equivalent to the Mexican dollar, was minted in India and gradually replaced the Mexican dollar in current use, although the latter remained legal tender and the standard by which other dollars were judged. The sterling or gold value of the dollar varied with the price of silver, giving Hong Kong a variable exchange relationship with London and the world at large but a reasonably stable one with China.
In 1845 the Oriental Bank issued the first banknotes in the Colony, and was followed by the Chartered Bank
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