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Currency Substitution Between the Hong Kong Dollar...
Journal article

Currency Substitution Between the Hong Kong Dollar and the Renminbi in South China

Abstract

The present paper estimates the demand for the Hong Kong currency circulating in the Guangdong Province of China and Macau. The amount of Hong Kong dollars circulating in the Guangdong (Macau) region is reckoned to be 7.4 (3.2) percent of the total amount issued in Hong Kong. The estimated coeficients in the currency demand equation suggest that the Hong Kong currency in Guangdong is used mainly for transactions. Therefore, in spite of strong evidence of currency substitution of the Renminbi with the Hong Kong Dollar, its impact on the exchange rate and on the international reserves of Hong Kong during currency crisis should be minimal.

Authors

Chan KS

Journal

Pacific Economic Review, Vol. 7, No. 1, pp. 37–50

Publisher

Wiley

Publication Date

January 1, 2002

DOI

10.1111/j.1468-0106.2002.00148.x

ISSN

1361-374X

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