Exchange fund’s primary statutory role under the Exchange Fund Ordinance is to affect the exchange value of the Hong Kogn Dollar. It can also be used to maintain the stability and integrity of the monetary and financial systems, with a view to maintaining Hong Kong as an international financial center.

The Exchange Fund’s asset allocation strategy is guided by an investment benchmark approved by the Financial Secretary on the advice of the EFAC.

Another function related to the Exchange Fund is currency issuance. Bank notes in denominations of HK$20 (US$2.56), HK$50, HK$100, HK$500 and HK$1,000 are issued by the three note issuing banks: Bank of China (Hong Kong) Ltd., The Hongkong and Shanghai Banking Corp. Ltd. and Standard Chartered Bank (Hong Kong) Ltd. The note-issuing banks may issue currency notes only by surrendering non-interest-bearing USD backing at a fixed exchange rate of HK$7.80 to US$1. Through the HKMA, the government issues HK$10 currency notes and coins in denominations of HK$10, HK$5, HK$2, HK$1, 50 cents, 20 cents and 10 cents. The value of all notes and coins in circulation at the end of 2015 was HK$371.8 billion.

(This section is dedicated to the coming 20th anniversary of Hong Kong’s return and the 20th anniversary of Shenzhen Daily, which fall on the same day — July 1.)