Cashless Product Management to CrossBorder Payment
  • A Few Words From the Author: Chief Chainlien
  • Intended Audience
  • Introduction: How to Get Rich
  • What Makes Money Money
    • A Medium of Exchange
    • A Unit of Account
    • A Store of Value
    • A Standard of Deferred Payment
    • Conculsion
    • Money Fun Facts
  • Timeline of Digital Money
  • Cryptocurrency
    • Case Study: Bitcoin (BTC)
    • Case Study: Ether (ETH)
    • Case Study: USDT
    • Case Study: HKD - A Paper Stablecoin?
  • Central Bank Digital Currency
    • Case Study: Sand Dollar (Bahamas)
    • Case Stuyd: e-CNY (China)
    • Cash Study: e-HKD (Hong Kong) and CrossBorder Transaction
  • The Cashless Promised Land
  • Appendix: Recommended Resources
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Case Study: HKD - A Paper Stablecoin?

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Last updated 2 years ago

The Hong Kong dollar's peg to the U.S. currency is a beacon of stability.

Pegged to the US dollar for nearly four decades, the currency in the Asian financial center is a stablecoin, albeit of the paper variety. Most days it relies — just like UST — on arbitrage to hold its value at 7.8 to the dollar.

The Hong Kong Monetary Authority runs a pure currency board. All of . And while fixing the exchange rate, the authority deliberately lets interest rates float freely to absorb pressures on the peg. When the local currency gets sold off, there’s a capital flight from Hong Kong. But that automatically raises interest rates enough to lure buyers back.

HKMA’s monetary base is backed 110% by US dollar assets