Chapter 636: 636

The content discussed by the Executive Committee of Xiangjiang banking association is related to the next trend of Xiangjiang stock market and real estate industry. The degree of importance is obvious, but the more specific process is certainly not as fresh and interesting as that in the entertainment industry. The financial secretary Xia Dingji first won the support of the banking industry for policy changes, which can be regarded as the purpose of this meeting,

However, Gao Xian has reservations about the ultimate goal of raising interest rates in the banking industry directly or rectifying the vigorous financial companies to derive a three-tier financial system in order to achieve a more effective interest rate increase in the banking industry and curb the decline of the Hong Kong dollar exchange rate.

It is true that from the perspective of academic theory and historical experience, the exchange rate will change in the desired direction by adjusting the interest rate, but this is based on the past model. Since the collapse of the Bretton Woods system, the pattern of upheaval is the first time, just like the shock caused by the epidemic in 2020 in the "old play", Academic theories and historical experience are often not so smart.

Otherwise, the western capitalist countries at this stage will not be overwhelmed by economic stagflation, so that the United States has begun to raise interest rates in the form of shock therapy.

You know, people have been engaged in economy and finance for at least a hundred years, and countless professionals have accumulated. If there is a comprehensive solution, it will not be at the cost of serious damage to agriculture and manufacturing.

In Gao Xian's view, the devaluation of the Hong Kong dollar is worth allowing the financial secretary Xia Dingji, who pursues the "active non intervention" policy, to take action. It can be said that Rome was not built in a day.

After the end of the Second World War, Britain's national strength declined, its economic strength weakened, and the pound depreciated several times, affecting the economy of Xiangjiang. The basis of the pound exchange standard no longer exists. When the pound floated in 1972, the Hong Kong dollar was soon decoupled from the pound and linked to the US dollar, that is, the official exchange rate was one US dollar to 5.65 Hong Kong dollars.

Ironically, it was around the time of the collapse of the Bretton Woods system, and the US dollar, which was also under great pressure of devaluation, was not so reliable. It depreciated by 10% in February 1973. The response measure taken by the Hong Kong dollar linked to the US dollar was to adjust the official exchange rate to one US dollar to 5.085 Hong Kong dollars

Unfortunately, the energy of the depreciation of the US dollar is too great. The Hong Kong government simply can not afford to carry the speculative international hot money. Therefore, it soon announced in November 1974 that the Hong Kong dollar was decoupled from the US dollar and the exchange rate was floating. At that time, the Hong Kong dollar had appreciated to one US dollar to 4.965 Hong Kong dollars.

In the early stage after the floating of the Hong Kong dollar exchange rate, the results were OK. The Hong Kong dollar exchange rate remained in the range conducive to the economic development of Xiangjiang, but then it was not satisfactory.

This can be seen from the Hong Kong dollar exchange rate index jointly compiled by Gao Yi and the Hong Kong government to reflect the overall value of Hong Kong dollar foreign exchange. The Hong Kong dollar exchange rate index fell below 100 in 1978. Last year, that is, 1980, it fell to a little more than 90. This year, it will certainly fall below 90. As for the market exchange rate between the Hong Kong dollar and the US dollar, it has long broken 6.

Gao Xian's view is that, in the final analysis, there is something wrong with Xiangjiang's monetary policy. The Hong Kong dollar implements the exchange rate floating policy, which has the freedom to adapt to changes, but it lacks a clear monetary policy goal. In particular, the Hong Kong government's operation is more arbitrary without the central bank in Xiangjiang, resulting in hidden worries.

For example, in principle, the logic of Hong Kong dollar issuance is very simple, that is, it depends on the foreign exchange reserves in the Xiangjiang exchange fund.

When Huifeng bank, Standard Chartered Bank and vantage bank issue Hong Kong dollar bills, they first deposit a relative amount of US dollars into the exchange fund in exchange for the statement of liabilities. However, the actual operation process in recent years is that Huifeng bank, Standard Chartered Bank and vantage bank do not need to hand over these foreign currencies in advance, but just transfer the value of Hong Kong dollar issued through account transfer, The statement of liabilities can be exchanged by transferring it into the accounts of the exchange fund at these note issuing banks. As for the foreign exchange actually prepared for issuance, the exchange fund will use these Hong Kong dollar balances to purchase from the foreign exchange market, and this space can not but provide a kind of randomness.

Therefore, Gao Xian believes that it is time to reform Xiangjiang's monetary policy, not when a great disaster is imminent.

Of course, this issue is beyond the scope of discussion of the Executive Committee of Xiangjiang Bank Association.

After the meeting, Gao Xian invited, "Sir Xia Dingji, are you free? Find a place to sit down. We haven't had a long talk for a while."

Facing Sir Gao, the youngest and most promising member of the Executive Council of the Hong Kong government, Xia Dingji certainly has time. Satisfied with the results of the meeting, he smiled in a good mood and said, "please arrange it for Sir Gao."

Gao Xian nodded slightly, "then go to the Xiangjiang meeting in Wenhua hotel."

Xiangjiang will rebuild the club building. The funds needed "depend" on Xiangjiang land. After the new club building is completed, it will be repaid in installments with the rent. Therefore, Xiangjiang will sometimes naturally listen to the opinions of Xiangjiang land. For example, it has temporarily moved to Wenhua Hotel, and this environment is still very suitable for Gaoxian and Xia Dingji to relax.

"Sir Xia Dingji has an increasingly heavy task on his shoulders. It is expected that the important task of the government will be tied together in the future." Gao Xian complimented.

As the "treasurer" of Xiangjiang, financial secretary Xia Dingji is the third in command of the Hong Kong government. His second in command, Chief Secretary Ji Da, will reach the retirement age this year. After ten years as financial secretary, Xia Dingji is the preferred candidate for the Chief Secretary to succeed governor MacLehose. In addition, governor MacLehose is in the state of extending his term of office for the fourth time. He is in good health and sometimes has to go back to London to see a doctor, The chief secretary, the second in command of the Hong Kong government, is required to act as an agent. Therefore, Xia Dingji's burden is really not easy.

To sum up, Xia Dingji and Gao Xian have known each other for more than ten years and have a lot of friendship. In this private occasion, they can't help but confide, "the emerging governance problems in Xiangjiang, an international metropolis with a population of more than five million, make me feel like I don't know what to eat."

Gao Xian smiled. In his position as financial secretary, Xia Dingji was very careful about the expenditure of the Hong Kong government. After governor Mai Lihao took office, one of the policy priorities was to improve the people's livelihood problems that led to the social unrest in Xiangjiang before. The extensive construction of houses and nine-year free education were inseparable from money, forcing Xia Dingji, the "financial master" of Xiangjiang, to find ways to expand financial resources everywhere, But it often has little effect.

For example, in 1976, when Xia Dingji wanted to increase the dividend tax, he had to put it on hold because of the opposition of non official members of the Legislative Council of the Hong Kong government.

That's a good sentence. It's more difficult to touch the interests than the soul. Xia Dingji wanted to increase taxes from stock trading. First of all, those British interest groups didn't agree.

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In a few months, Xia Dingji will be promoted to the Chief Secretary of the Hong Kong government step by step. He has a wider range of management, but he can't do without money. It's not surprising that he feels pressure.

Seeing Gao Xian's complacent appearance, Xia Dingji put down his glass and urged: "Sir Gao, since we met, you have been proud of your development in the industrial and commercial circles all the way. In order to promote Xiangjiang's international trade, you have personally visited all over the world. You must have a lot of experience. Don't you have any suggestions for me?"

Gao Xian said leisurely: "of course, there is no shortage of ideas, but in the environment of Xiangjiang, once it touches vested interests, it is often difficult to do anything."

Xia Dingji sighed with deep sympathy and said, "now sir Gao is also a representative of vested interest groups."

Gao Xian was amused. He touched his chin's beard and thought about it. He slowly opened his mouth and said, "I think of an idea after being run by you."

Xia Dingji's spirit perked up, "talk about it."

Gao Xian said calmly, "have you noticed that a small oil producing country in the Middle East like Kuwait has established a special investment institution to increase wealth, which is a long-term strategy."

"Over the years, Gaoyi and I have gained a lot in investment. If we are not modest, we are unparalleled in the scope of Xiangjiang."

"Why don't you think about it? From the exchange fund or the government treasury, try to set up a special investment institution and entrust it to Gaoyi. I guarantee that the average return on investment in the next ten years will be more than 20 percent."

Xia Dingji pondered, "this idea is very feasible. What does Sir Gao want in return?"

"I pay more attention to the invisible report." Gao Xian shrugged. "It's like the issuing right of a bank. The patterns and words on Hong Kong dollar bills have a unique advertising effect. If Gao Yi can help the government manage the fund well, it will become a gold signboard."

Relying on his understanding of Sir Gao and Gao Yi over the years, Xia Dingji believed that there was no problem with his motivation and enthusiasm. After discussing for a while, he officially said: "Sir Gao asked Gao Yi to issue a report, and I strive to implement it in the second half of this year."

"OK, I'll arrange Gao Yi to fully cooperate with Sir Xia Dingji and Zhengfu." Gao Xian nodded.

However, this topic is only a prelude to this gathering. Gao Xian quickly found an opportunity to turn to the main topic, "I think that the current Hong Kong dollar exchange rate is so weak, I'm afraid it's not enough to use the exchange rate to exert influence, and we have to do more."

Xia Dingji asked curiously, "what does Sir Gao mean by multi pronged approach?"

"Interest will become a kind of resistance, but it is also a driving force." Gao Xian said with confidence: "at present, the Hong Kong dollar issuance mechanism focuses on the direction of expansion. When Xiangjiang's economy overheats, there is no effective method to shrink the direction, especially the method of driving it with interest, which is more effective than buying Hong Kong dollars directly from foreign exchange funds."

"My idea is that in addition to the floating market exchange rate, a relatively fixed internal exchange rate should be established between the exchange fund and the note issuing banks. When the depreciation of the Hong Kong dollar exceeds the reasonable range considered by the financial secretary, the note issuing banks and other licensed banks that can conduct transactions through the note issuing banks should have the initiative to recover the Hong Kong dollar in circulation, so as to help stabilize the Hong Kong dollar exchange rate."

Xia Dingji soon understood Gao Xian's idea. Establishing a relatively fixed internal exchange rate between the exchange fund and note issuing banks is essentially equivalent to formulating a relatively clear monetary policy goal, but the Hong Kong government has correspondingly reduced its operational randomness.

Gao Xian looked at Xia Dingji with a funny heart. It's your turn to represent the vested interest group. It depends on how dignified you are.

"Sir Gao's plan sounds good, but, but..." Xia Dingji "but" several times, and finally said, "it's a big thing, and it still needs to be carefully demonstrated."

"I knew I wouldn't be happy." after Gao Xian said something, he retreated and said, "I know some friends in the circle of economists, many of whom are famous experts from Britain and the United States. I can ask them to come and help me demonstrate."

"But the demonstration also needs a realistic model. I think it's better to try this method first between favorable banks and the exchange fund, and then set a ceiling for the daily recovery of Hong Kong dollars."

In the final analysis, the devaluation of the Hong Kong dollar is worth worrying the Hong Kong government, otherwise it will not start thinking about raising interest rates in the banking industry.

In this context, Xia Dingji, the financial secretary, is quite competent. Facing a rare feasible scheme, he is as good as a runner: "OK, please help the bank to formulate a reasonable internal exchange rate with the monetary authority as soon as possible to see the effect?"

"That's settled. I'll go to Britain and the United States to invite economists to Xiangjiang to demonstrate immediately." Gao Xian GBE, JP, your excellency, waved his hand with great satisfaction.

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