Hong Kong Government's fiscal policy had been conservative and had accumulated huge surpluses prior to 1997. ... Even with the emergence of huge fiscal deficit these years, the government is inclined to tap the fiscal reserve and to set goals in achieving budget balance. It is unlikely that the government will issue bonds to finance the fiscal deficit directly which deviates from strict fiscal discipline as required by a currency board system and exerts negative impacts on financial stability that outstrips the benefits of developing a bond market . ...

• Word Count: 1396
• Approx Pages: 6
• Grade Level: Undergraduate

These exchange rate systems had been operated largely through linkages with the United States (US) dollar as their anchor Such external policy mixes are only sustainable in the longer term if there is close harmonisation of economic/financial policies and conditions with those of the anchor country. Otherwise these policies destabilising capital flows would inevitably undermine the exchange rate. ... According to this view, an exchange rate anchor was particularly effective in countries with high inflation say, high two digits levels that had already tackled (most of) their fiscal imbalance...

• Word Count: 2133
• Approx Pages: 9
• Has Bibliography
• Grade Level: Undergraduate

Fixed Exchange Rate Policy According to the United States Agency of International Development (2011), "A fixed exchange rate regime might better be called, the fix the exchange rate (foreign currency price of the national currency) and, if necessary, devalue (lower the foreign currency price of the national currency) when it becomes too difficult to maintain the rate regime". ... The International Monetary Fund can tighten this discipline of the monetary and fiscal policy over a period of time to monitor the adjustment of deflation or disinflation to ensure stability in the economy. ...

• Word Count: 1468
• Approx Pages: 6
• Has Bibliography
• Grade Level: Undergraduate