The Hong Kong dollar is the official currency of the Hong Kong Special Administrative Region (SAR) within the People's Republic of China. Under the Basic Law of Hong Kong and the Sino-British Joint Declaration, Hong Kong retains autonomy with respect to currency issuance.
The Hong Kong dollar is issued by one of three banks in Hong Kong under the supervision of the territory's de facto central bank Hong Kong Monetary Authority. These banks are the Bank of China, Standard Chartered Bank and The Hongkong and Shanghai Banking Corporation. Each bank has its own design for the paper bank notes, but the size and colors are consistent for each denomination. Starting in 1997, prior to the establishment of the Special Administrative Region notes and coins with Queen Elizabeth II's portrait were gradually withdrawn from circulation, and now most of the notes and coins in circulations feature the Hong Kong's bauhinia flower or other symbols.
The Hong Kong dollar is pegged to the United States dollar since October 17, 1983 at HK$7.80 per U.S. dollar through the currency board system. A bank can only issue a Hong Kong dollar if it has the equivalent exchange in U.S. dollars on deposit.
The currency board system ensures that Hong Kong's entire monetary base is backed with U.S. dollars at the linked exchange rate. The resources for this backing are kept in Hong Kong's Exchange Fund, which is among the largest official reserves in the world.
Between 1863 to 1935, Hong Kong used silver dollars as legal tender.
The local unit was pegged to the British pound from December 1935 to November 1967 at the rate of HK$16 per pound, and from November 1967 to June 1972 at HK$14.55 per pound.
In July 1972, it was repegged to the U.S. dollar at HK$5.65 per dollar, and in February 1973, it was re-set to HK$5.085 per dollar.
The Hong Kong dollar was allowed to float freely in November 1974 until it was repegged in October 1983.
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History
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