🇭🇰Hong Kong Dollar (HKD)

Hong Kong banknotes are not printed by the central bank. Three licensed commercial banks issue them, HSBC, Standard Chartered and Bank of China (Hong Kong), each with its own designs, which is why notes of the same denomination can look completely different and all be genuine. The government issues the ten-dollar note and every coin. A note issuer cannot simply print: it must deposit US dollars with the Exchange Fund and receive Certificates of Indebtedness in return, so the currency in circulation is backed one for one in dollars.

The link came out of a crisis of confidence. The currency had followed sterling until 1972, then the US dollar, then floated from 1974, and by 1983, with the negotiations over Hong Kong's future under way, it was falling sharply; the peg was adopted that October and has survived every stress since. Since 2005 the Hong Kong Monetary Authority operates convertibility undertakings at both edges of the band, buying or selling US dollars when the currency reaches them, so the rate drifts within a corridor rather than sitting on a single figure. The trade-off is monetary: Hong Kong follows US interest rates closely, because with the exchange rate anchored, rates are where the pressure is absorbed.

The Hong Kong dollar is the sole legal tender of the Hong Kong Special Administrative Region; mainland China uses the renminbi and Macao the pataca, though many Macao businesses accept Hong Kong dollars.