An Introduction to Doing Business in Hong Kong 2021 - Preview

9 AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2021 Financial system The Hong Kong financial system is composed of four different financial regulators, each one governing different parts of the financial sector. These include the Securities and Futures Commission (SFC, an independent body set up to regulate the securities and future markets), the Mandatory Provident Fund Schemes Authority (MPFA, a statutory body set up to assist Hong Kong’s workforce to accumulate savings for their retirement), the Insurance Authority (IA, a body set up to protect the interests of policyholders and promotes the general stability of the insurance industry), and the Hong Kong Monetary Authority (HKMA, the government’s agency responsible for maintaining monetary and banking stability). Despite the HKMA’s role as the currency board and de facto central bank, it does not print currency notes itself. Instead, it grants Hong Kong dollar printing privileges to HSBC, Standard Chartered Bank, and the Bank of China. Under the Linked Exchange Rates System (LERS), the Hong Kong dollar has been pegged to the US dollar since 1983, at a rate of HK$7.80 to US$1, which has helped maintain monetary stability. Through the exchange rate system, the HKMA authorizes note-issuing banks to issue new banknotes, as long as an equivalent amount of US dollars is deposited with the HKMA.