THURSDAY, JULY 12, 1990
"HONEY STAYS IN HONG KONG BECAUSE PEOPLE ARE SURE THAT MONEY CAN BE MOVED OUT OF HONG KONG ANY TIME THEY WANT TO, WITHOUT QUESTIONS BEING ASKED AND FORMS TO BE FILLED IN.
"THIS WILL CONTINUE. IT WILL CONTINUE BEYOND CONCERNED RECOGNISE THE IMPORTANCE OF THIS TO HONG KONG, SAID, ADDING THAT THIS HAS BEEN VERY CLEARLY WRITTEN
DECLARATION.
IN
1997.
H
ALL
MR YAM THE JOINT
GAVE THE
TURNING TO THE LINKED EXCHANGE RATE SYSTEM, MR YAM ASSURANCE THAT THERE WAS ABSOLUTELY NO INTENTION FOR THE LINK TO BE ABANDONED OP. THE RATE CHANGED.
*ONE OF THE CRUCIAL ELEMENTS OF STABILITY IN HONG KONG IS THE STABILITY OF THE EXCHANGE VALUE OF THE HONG KONG DOLLAR, MR YAM SAID.
**
WITHOUT THE LINKED EXCHANGE RATE SYSTEM, AND THE VARIOUS REFORM MEASURES THAT HAD BEEN INTRODUCED RECENTLY TO HONG KONG'S MONETARY SYSTEM, THE MONETARY ENVIRONMENT WOULD HAVE BEEN CHAOTIC, MR YAM
NOTED.
"IN HONG KONG'S CASE, THERE WERE ONLY NINE YEARS IN THE HISTORY OF THE HONG KONG DOLLAR THAT IT WAS FLOATING.
"AND THE EXPERIENCE OF THOSE NINE YEARS, FROM 1974 TO 1983 WAS, TO PUT IT MILDLY, UNPLEASANT," MR YAM SAID.
"FOR
MOST OF THE TIME AND PARTICULARLY IN THE SECOND HALF OF THAT NINE-YEAR PERIOD, THE HONG KONG DOLLAR WAS DEPRECIATING. INFLATION AS A RESULT WAS HIGH, SO WERE THE GROWTH RATES OF MONEY AND CREDIT.
"ALTHOUGH INTEREST RATES WERE KEPT HIGH, THEY WERE LARGELY INEFFECTIVE IN CONTAINING THE SPIRAL OF MONETARY EXPANSION, INFLATION AND CURRENCY DEPRECIATION.
"WITH THE BENEFIT OF HINDSIGHT, EVEN IF THERE HAD NOT BEEN CONCERN THEN ABOUT THE POLITICAL FUTURE OF HONG KONG, WE MIGHT STILL HAVE FOR ECONOMIC REASONS RETURNED TO A FIXED EXCHANGE RATE SYSTEM IN 1983," MR YAM STRESSED.
HE SAID THE WORLD WAS NOWADAYS MOVING TOWARD AN ENVIRONMENT WITH MORE STABLE EXCHANGE RATES, IF NOT FIXED EXCHANGE RATES.
NOTE TO EDITORS:
MR YAM'S SPEECH WILL BE BOXED.
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