As a means of delivering financial stability, both Hong Kong and Argentina have adopted the so-called currency board system under which their respective currencies are linked to and fully backed by the US dollar. But the crisis which is wrecking the Latin American country shows that by itself, the system is insufficient to guarantee stability. With the country facing mounting debts and financial problems, Argentinians fear that the peso's link with the greenback may snap and have been heavily withdrawing their money from banks and sending it overseas. As no country can withstand a sustained outflow of capital, the Argentine authorities have resorted to limiting cash withdrawals and transfer of funds abroad. These measures may reduce volatility in the short term, but the long-term outlook for the Argentine currency and its economy remains in doubt. The SAR came perilously close to being engulfed by a currency crisis in 1998, when speculators mounted simultaneous attacks on the local stock and foreign exchange markets with the aim of sapping public confidence in the Hong Kong dollar's link with the US dollar. To their credit, SAR officials took decisive action to beat off the attackers and have remained on their guard since. With a sizeable fiscal reserve, a strong banking system and no debt problems, Hong Kong is no Argentina. But the SAR will need to be vigilant of any inherent risks which may undermine our system. Any populist demands that would jeopardise fiscal prudence must be steadfastly resisted. Although the link may have to be abolished some day, any premature speculation would be ill advised.