Eddie Yue Wai-man, chief executive of the Hong Kong Monetary Authority, says the linked exchange rate system is the cornerstone of monetary and financial stability in Hong Kong. (CALVIN NG / CHINA DAILY)

HONG KONG – The chief executive of the Hong Kong Monetary Authority (HKMA) said on Tuesday that the city has no intention and sees no need to change the linked exchange rate system (LERS), which was introduced in October 1983.

Noting that the system is the cornerstone of monetary and financial stability in the special administrative region, Eddie Yue Wai-man said it has provided Hong Kong with the stable monetary environment necessary for the continuous development of its economy and community.

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"The LERS is the strong breakwater, or typhoon shelter, that protects us from stormy seas,” Yue wrote on the authority’s official column to mark the 40th anniversary of the Hong Kong dollar’s peg to the greenback, terming LERS “a good system”.

As we have said many times before, we have no intention and we see no need to change the LERS.

Eddie Yue, Chief Executive, HKMA

Since its introduction in October 1983, LERS has provided Hong Kong with the stable monetary environment necessary for the continuous development of our economy and community, he wrote.  

“During this period, the LERS has helped Hong Kong weather a succession of shocks and crises, and the many severe challenges that we have encountered, highlighting the system’s resilience and robustness.”

One of the crucial factors leading to the success of the system is the credibility that it has built up over the years, he said in the article posted on the website of the HKMA, the city’s de facto central bank.

This confidence rests on the robust design of the system in line with market disciplines, its highly transparent and rule-based mode of operation, as well as Hong Kong's abundant foreign reserves, strong fiscal position and dynamic economy, added Yue.

“As we have said many times before, we have no intention and we see no need to change the LERS.”

Change is constant for financial markets and the implications are more far-reaching, he said. “But we must also always bear in mind the value of keeping a good system. We keep a system not for the sake of keeping it, but because we have thought things through carefully to reach an informed decision.”

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Pointing out that many other economies and financial centers are also feeling the pain of high-interest rates, even those that do not adopt a fixed exchange rate, the HKMA chief said whether or not Hong Kong implements the LERS does not seem to be the most critical factor.