China’s policies of
maintaining Hong Kong’s status as an international financial center and preserving
its autonomy in monetary and financial affairs after 1997 are clearly enshrined in the
Joint Declaration of 1984 and the Basic Law of 1990. The Basic Law has the following
provisions:
"109. The Government of the Hong Kong Special
Administrative Region [HK S.A.R.] shall provide an appropriate economic and legal
environment for the maintenance of the status of Hong Kong as an international financial
center.
"110. ... The Government of the HK S.A.R.
shall, on its own, formulate monetary and financial policies, safeguard the free operation
of financial business and financial markets, and regulate and supervise them in accordance
with law.
"111. The Hong Kong dollar, as the legal tender
in the HK S.A.R., shall continue to circulate. The authority to issue Hong Kong currency
shall be vested in the Government of the HK S.A.R. The issue of Hong Kong currency must be
backed by a 100 percent reserve fund.... The Government of the HK S.A.R. may authorize
designated banks to issue or continue to issue Hong Kong currency under statutory
authority, after satisfying itself that any issue of currency will be soundly based and
the arrangements for such issue are consistent with the object of maintaining the
stability of the currency.
"112. No foreign exchange control policies
shall be applied in the HK S.A.R. The Hong Kong dollar shall be freely convertible.
Markets for foreign exchange, gold, securities, futures and the like shall continue. The
Government of the HK S.A.R. shall safeguard the free flow of capital within, into and out
of the Region.
"113. The Exchange Fund of the HK S.A.R. shall be managed and
controlled by the Government of the Region, primarily for regulating the exchange value of
the Hong Kong dollar."
