Chapter1 Money and Inflation
Introduction
Demand of money
Demand for money
Concept of liquidity
Importance nature types and functions of money
Value of money and its measurement
Inflation
Money and inflation
Fisher's equation and the value of money
Index-linking of financial assets
Measuring inflation in Hong Kong
Shortcomings of CPIs
Inflation in Hong Kong
Money supply measures in mainland China
Inflation in mainland China
Key concepts and definitions in chapter
Revision questions on chapter
Chapter2 Money Supply and the Hong Kong Environment
Introduction
Measurement of money supply in Hong Kong
Growth in money supply
Foreign currency swap deposits
Growth in Hong Kong money supply
Anomalies in the Hong Kong money supply measurement
Hong Kong's monetary base
Credit-creation by banks and the monetary base
Can banks create money indefinitely?
Factors that cause changes in the money supply
Not-issuing in Hong Kong currency in Macau and China currency substitution
Money supply in mainland China
Key concepts and definitions in chapter
Revision questions on chapter
Chapter3 Monetary Policy of Hong Kong and the Linked Exchange Rate
Introduction
Exchange Fund
Management of the Exchange Fund
Linked Exchange Rate System
Operation of the Linked
Interest rate flexibility and the Linked
Accounting Arrangements
Real Time Gross Settlement [RTGS] system
Exchange Fund Bill and Notes
Hong Kong Monetary Authority [HKMA]
Objective of Hong Kong monetary policy
Monetary management
HKMA achievements and challenges
A critique of HKMA achievements
Hong Kong monetary relations with mainland China after the handover
Conduct of monetary policy in mainland China
Key concepts and definitions in chapter
Revision questions on chapter
Chapter4 Interest Rates
Introduction
Theories of interest
Types of interest rates
Factors that cause changes in the level of interest rates
Effects of changes in the general level of interest rates
The yield curves and term structure of interest rates
Lending risks
Effects of changes in inflation rates on yield curve
Interest rates in the Hong Kong banking market
Interest Rates Agreement
Bank interest rates cartel deregulation
HK Interest rates under US dollar-linked arrangement
Liquidity Adjustment Facility and Interest Rates
Interest rates in mainland China
Key concepts and definitions in chapter
Revision questions on chapter
Chapter5 Financial Markets in Hong Kong
Introduction
Hong Kong Debt (Bond) Market
Hong Kong Market
Financial Futures Markets
The stock Exchange of Hong Kong (SEHK)
Financial instruments
Risks-hedging instruments
Credit cards in Hong Kong
Hong Kong as a financial centre
Financial markets in mainland China
Key concepts and definitions in chapter
Revision questions on chapter
Chapter6 Financial Institutions in Hong Kong
Introduction
Non-bank financial institutions (NBFIs) in Hong Kong
Banking and financial institutions (BFIs) in Hong Kong an overview of banking industry
Official and semi-official financial institutions
Ring-fencing against political risk
Balance sheets of authorised institutions
Greater disclosure
Performance of the banking sector
Bank interest rates spreads and bad debt provisions
Effects on Hong Kong banking of HK dollar circulating in China
Hong Kong Association of Banks [HKAB]
Real Time Gross Settlement [RTGS] system further discussion
Hong Kong Int
Chapter7 Hong Kong Regulatory Environment
Introduction
Regulation of banking in Hong Kong
Statutory and operational requirements of Authorised
Introduction (AIs) in Hong Kong
Principal obligations of Authorised Institutions (AIs) under the Banking Ordinance
Capital Adequacy Ration (CAR) requirements
Interest rate and market risks and capital adequacy
Basle Committee rules on value at risk
Strengthening supervision of derivatives trading
Liquidity adequacy
Banking Supervision by HKMA
Banking (Amendment) Ordinance 1997
Money laundering
Netting on off-balance sheet transactions
The Securities and Futures Commission (SFC)
Companies Registry
Financial surveillance and supervision in mainland China
Key concepts and definitions in chapter
Revision questions on chapter
Chapter 8 Balance of Payments
Introduction
Structure of balance of payments accounts
Terms of trade (TT)
Financing and correcting current account deficit
Current account surplus
Hong Kong's Balance of Payments (BoP)
Importance of foreign trade to Hong Kong
Composition of Hong Kong's imports and exports of goods and services
Hong Kong-China investment and trade
Effects of changes in Hong Kong's terms of trade on its business environment
Balance of Payments of mainland China
Key concepts and definitions in chapter
Revision questions on chapter
Chapter9 Exchange Rates
Introduction
Exchange rate systems
Determination of and movements in exchange rates
Relationship between rates and interest rates
Hong Kong Foreign Exchange Market
Hong Kong dollar exchange rater
Arbitrage and market exchange rater stability
Effects of arbitrage on Hong Kong money supply
Interest rater and the linked exchange rater
Self-regulating adjustment of the Hong Kong economy
Effects of US economic conditions on Hong Kong exports
Connection between budget deficit interest rates exchange rates and balance of trade
Black Thursday -23 October 1997
Current board system
Repo arrangements between Asian central banks
Hong Kong moves to avert possible recession
European Monetary System [EMS]
EU member and the proposed single currency
The effect of euro on Hong Kong financial institutions
Hong Kong linked exchange rate and the ERM of the EU compared
Euro worries
Exchange rate of China's yuan/renminbi
Chinese renminbi and HK dollar
Key concepts and definitions in chapter
Revision questions on chapter
Chapter10 International Monetary System
Introduction
International liquidity assets
[MF credit arrangements
Eurocurrency markets
European Currency Unit
International financial
Key concepts and definitions in chapter
Revision questions on chapter

With the creation of massive global financial markets beyond the control of any Government the behaviour and power of these markets can make all the difference between success and failure of any economic policy and governments in the financial markets are unlikely to go away
While the Black Thursday [23 October 1997] and subsequent events have increased our awareness on new dimensions in the global markets this new edition maps out a route from perplexity featuring traditional practices in the financial system and also the impact of the recent crisis on monetary management
This book widens financial practitioner's phenomena As readers approach the last chapters they will at least be much better informed if not wiser