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Accompanying the article are tables and charts showing the balance sheet of the Exchange Fund, including a currency breakdown for the assets, for the period from 1936 to 1994.
The data for 1945-1985, which have not been disclosed before, show that at various times in the past, more frequently so in the initial period when the Hong Kong dollar was floated, the Fund has shown net accumulated deficits. However, net accumulated surpluses have dominated recent years.
Some of the more notable events in the history of the Exchange Fund that are analysed in the article include:
The background to the formation of the Exchange Fund in 1935.
The resumption of the note issue after the war years.
The use of intervention by the Government to preserve the exchange rate, which has been a major use of the Fund since the early 70s and was first used less than a month after the Hong Kong dollar link with Sterling was broken.
The currency crisis in 1983, which resulted in the establishment of the present linked rate system.
The intervention during the currency crisis in 1983, which was extensive, and which the article demonstrates yielded a net profit for the Exchange Fund.
The use of the Exchange Fund in the rescue of seven banks in the 1980s. In most cases, the Exchange Fund either took over the problem bank and sold it to the private sector after nursing it back to health or extended financial assistance to enable third parties to undertake the restructuring. The article says that the net cost to the Exchange Fund of the rescue operations during the 1983-1993 period was HK$3,800 million in accounting terms.
The development of the monetary reform measures in the late 1980s and early 1990s, culminating in the formation of the HKMA.
End/Thursday, May 25, 1995