Former Hong Kong Monetary Authority says ‘tiny changes’ in Biden-era report reason for hope, sees no threat of local dollar losing peg to US currency

Joseph Yam Chi-kwong, Monetary Authority chief between 1993 and 2009, notes State Department’s most recent Hong Kong Policy Act Report underscored city’s autonomy when it came to monetary policy

Removing the Hong Kong dollar’s peg to its US counterpart could have unintended consequences for global markets, he argues

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A woman walks by a money exchange shop decorated with banknotes from different countries in Hong Kong’s Central district. Photo: AP

Published: 1:17pm, 4 Apr 2021Updated: 2:56pm, 4 Apr 2021

A former chief of Hong Kong’s de facto central bank has noted an improvement in the United States’ attitude towards Hong Kong under the new Biden administration and expressed confidence the country will not deploy “nuclear” financial weapons on the city.

Joseph Yam Chi-kwong, head of the Monetary Authority between 1993 and 2009, said he believed that while the US had been playing hardball with China over the sweeping national security law it imposed on Hong Kong last year, the sanctions so far employed would not take a huge toll on the city’s status as an international financial hub.

Nor would Washington implement the so-called nuclear option of removing Hong Kong’s long-standing peg to the US dollar, he argued.

The first Hong Kong Policy Act Report issued since US President Joe Biden (pictured) took office offered a glimmer of hope, according to former city Monetary Authority chief Joseph Yam. Photo: Bloomberg

Since Beijing introduced the national security law last June – legislation later cited in the mass arrest of local opposition figures – the US has imposed personal sanctions on a raft of Hong Kong and mainland officials.

The threat of additional sanctions has loomed since last week, when China’s top legislative body, the National People’s Congress Standing Committee, announced a radical revamp of the city’s electoral process. Critics said the moves, which included slashing the number of directly elected seats to Legco and introducing a vetting process expected to effectively sideline the opposition, left little room for dissenting voices.

Addressing the existing US sanctions on a Sunday radio programme, Yam said they “only apply to a [particular] group of people, and bar banks from providing them with financial services”.

“I think the extent of the sanctions will not affect Hong Kong’s status as an international financial hub,” he said.

A month after the Beijing-imposed security law was passed last year, then US President Donald Trump, who accused the mainland authorities of undermining Hong Kong’s autonomy, signed an executive order stripping the city of its special trading status.