Hong Kong Monetary Authority (HKMA)

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Definition of 'Hong Kong Monetary Authority (HKMA)'

The Hong Kong Monetary Authority (HKMA) is the central bank of Hong Kong. It was established in 1993 under the Hong Kong Monetary Authority Ordinance. The HKMA's main responsibilities are to maintain monetary and financial stability in Hong Kong, issue banknotes, and regulate the banking industry.

The HKMA is governed by a board of directors, which is appointed by the Chief Executive of Hong Kong. The board is chaired by the Financial Secretary of Hong Kong. The HKMA's staff is headed by the Chief Executive, who is appointed by the board.

The HKMA's monetary policy is based on the currency board system. Under this system, the Hong Kong dollar is pegged to the US dollar at a fixed exchange rate of HK$7.80 to US$1. The HKMA maintains this peg by intervening in the foreign exchange market to buy or sell Hong Kong dollars as needed.

The HKMA also regulates the banking industry in Hong Kong. It does this by setting rules and regulations for banks, and by monitoring their activities. The HKMA also has the power to take action against banks that are not complying with the rules and regulations.

The HKMA plays an important role in the Hong Kong economy. It helps to maintain monetary and financial stability, which is essential for a healthy economy. The HKMA also regulates the banking industry, which helps to protect consumers and investors.

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