金融：由發鈔銀行到聯繫匯率

1. 1845–1918: banks, banknotes and Chinese capital

In April 1845 the Oriental Bank opened a Hong Kong branch, the first local institution to operate and issue banknotes. On 3 March 1865 British interests established the Hongkong and Shanghai Banking Company, headquartered on Queen’s Road Central, then the only bank headquartered in Hong Kong and granted note-issuing rights. In this period the financial centre’s core functions were trade finance, remittance and note issuance, serving mainly foreign trading houses and the port economy.

Chinese capital then entered. In 1891 the Bank of China and Japan was founded with joint Chinese and foreign capital. On 23 March 1912 the Bank of Canton was established as the first bank in Hong Kong funded entirely by Chinese capital. On 14 November 1918 Chinese merchants including Kan Tong-po, Li Koon-chun, Li Tse-fong and Chow Shouson registered the Bank of East Asia. More banks meant finance was no longer only for foreign trade; it began to serve Chinese commerce and savings.

2. 1935–1945: currency reform, the Exchange Fund and war

In 1935 the Hong Kong Government enacted an ordinance allowing the Treasurer to issue one-dollar notes and requiring an issue guarantee fund. On 13 December that year it provided that notes issued by the Mercantile Bank, HSBC and the Chartered Bank were legal tender, created an Exchange Fund, replaced the note-issuing guarantee with certificates of indebtedness and bought back silver dollars from the public. The reform pushed Hong Kong further from the silver standard towards managed paper currency and foreign exchange reserves.

On 13 September 1945 the military government announced that the Hong Kong dollar would regain legal tender status from the next day. Japanese military notes and forced-signed Hong Kong dollars of ten yen or above were discontinued, while notes of ten yen or below remained valid to ease the shortage of paper currency. War broke the monetary system; restoration was not simply “using the Hong Kong dollar again” but dealing with military notes, forced signatures and public confidence.

3. 1976–1983: financial policy and the currency peg

On 29 October 1976 the Government created a Financial Services Branch within the Colonial Secretariat to manage public assets and liabilities and set monetary and foreign exchange policy. The step marked financial policy becoming a distinct field rather than work scattered across departments; the Government was no longer only supervising banks but actively managing money and foreign exchange.

On 7 July 1980 the Stock Exchange of Hong Kong completed its registration, moving the securities market from multiple exchanges towards one. On 17 October 1983 the Government announced the linked exchange rate system, a currency board mechanism pegging the Hong Kong dollar at 7.8 to one US dollar to stabilise the exchange rate. The arrangement remains central to Hong Kong’s financial system, but it is a policy choice, not a natural law.

The cost of the peg must also be stated: local interest rates follow US rates, so when the United States tightens while Hong Kong needs ease, policy space narrows. A fixed rate brings stable expectations but shifts adjustment pressure onto prices, wages and asset values. That trade-off cannot be explained by “confidence” alone.

4. 1995–1997: foreign exchange and reserves

A Bank for International Settlements survey in April 1995 showed Hong Kong’s average daily foreign exchange turnover at US$91 billion, 6% of the global total and fifth worldwide. The figure shows Hong Kong was not only a regional banking centre but a deep foreign exchange market where banks, brokers, firms and investors traded currencies daily, producing prices and liquidity.

On 23 October 1997 the Monetary Authority announced that Hong Kong’s foreign exchange reserves at the end of September were US$88.1 billion, third globally. Reserves back the linked exchange rate and signal market confidence, but large reserves do not mean the financial system is risk-free. Bank asset quality, property leverage and external shocks can still produce sharp volatility.

Rankings also move. FX turnover and reserves are affected by global markets, US interest rates and regional competition, and can rise or fall within a year. Treating one year’s rank as permanent status ignores changes in institutions and market structure. The real question is what sustains market depth, and whether the system has room to adjust when the external environment changes.

5. The limits of this dossier: a financial centre does not benefit everyone equally

This dossier focuses on banks, currency and the foreign exchange system. It does not have enough registered entries to cover securities regulation, insurance, the Mandatory Provident Fund, renminbi business, fintech or virtual assets. Each needs its own statutes and official data; a history of the exchange rate cannot stand in for them.

Finance also changes other parts of the city: office rents, property prices, employment structure and income inequality are all connected to financial expansion. Those effects need separate statistics and policy analysis. This dossier points to the relationship but will not present the “financial centre” as a story in which everyone gains.