Laissez-faire’s Limitations: The Evolution of Monetary Policy in Hong Kong, 1935–80

  • Leo Goodstadt
Chapter
Part of the Palgrave Macmillan Studies in Banking and Financial Institutions book series (SBFI)

Abstract

Hong Kong’s path to prosperity has been very different from other Third World societies. Its economic performance in the second half of the last century was a record of sustained and largely self-financed success.2 Its growth rates were, arguably, unparalleled in economic history, and real GDP increased each year without exception from 1961 until 1998.3 Economic expansion was never hindered by a shortage of the capital needed to finance high-speed growth.4 Also remarkable was how little change took place in the government’s economic policies. Laissez-faire was discarded by the rest of the world but flourished in Hong Kong together with free trade, a belief in the efficacy of free market forces and minimal state interference with business. Hong Kong also stuck to the monetary arrangements of the past. It retained a ‘currency board’ system, and the government insisted that interventionist monetary policies were unnecessary because the Hong Kong economy was self-regulating.

Keywords

Exchange Rate Monetary Policy Banking System Money Supply Bank Lending 
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Notes

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© Leo Goodstadt 2009

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  • Leo Goodstadt

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