n Dec 31, last year, the city’s financial reserves stood at a whopping HK$1.7 trillion.

With all this talk of money, City Weekend explores the history behind the colourful bills Hong Kong is
infatuated with.

How did this surplus arise?

Each year the Hong Kong government budgets how much it will need to spend for each of its eight
sectors, including education, security and infrastructure. The simple reason for the surplus in money
is the conservative approach the city takes to spending.

Officials are obliged to follow the rules on fiscal spending laid out by Article 170 of the Hong Kong
Basic Law, the city’s mini-constitution: keep expenditure within the limits of revenue; strive to
achieve a fiscal balance and avoid deficits; and keep the budget commensurate with gross domestic
product.

In addition, the city’s red-hot property market has fuelled stamp duty revenues and a windfall from
the sale of government land, meaning the city’s revenue surplus has been underestimated for nearly
10 consecutive years.

Who handles Hong Kong’s money?

The Hong Kong Monetary Authority is the governmental currency board and also the de facto
central bank for Hong Kong and the Hong Kong dollar. The aim of the authority is to maintain
currency stability to safeguard the economy.

Under licence from the authority, the city has three money-printing commercial banks: Bank of
China, Standard Chartered, and HSBC. All coins and HK$10 notes are issued by the Hong Kong
government, but each of the three private institutions issues its own designs for the HK$20, HK$50,
HK$100, HK$500, and HK$1,000 bill denominations. The banknotes are printed by Hong Kong Note
Printing Limited.

Macau also circulates the Hong Kong dollar, contributing to the currency’s status as the 13th most
traded in the world as of 2016.

History of the Hong Kong dollar

Hong Kong was established as a free trading port in 1841, but it wasn’t until 1863 that Britain began
issuing special coinage as a subsidiary of the British pound – marking the start of the Hong Kong
silver dollar and half dollar coins. Later that decade, HSBC and Standard Chartered – then known as
the Chartered Bank of India, Australia and China – began to circulate the Hong Kong dollar in the
city.

In 1935, the Hong Kong dollar, as its own entity and distinct currency, was born, with a fixed peg of
one British pound to HK$16 two years later. Since 1972 the local currency has been pegged to the US
dollar in a unique type of exchange rate regime. The current fixed link rate was established in
October 1983 after nine year