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Strategies & Market Trends : Asia Forum
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To: Paul Berliner who wrote (5674)8/20/1998 7:46:00 AM
From: Chip McVickar  Read Replies (1) of 9980
 
Paul and Thread
There are 2 excellant artiles in the Wall Street Journal 20th Aug p.A14
That attend to these very subjects being discussed here.
Unfortunately I do not have a link.
Perhaps someone else will..?

One is by Mr. Joesph Yam chief executive of the Hong Kong Monetary Authority
essentially the currency board. The other is by Judy Shelton author of
"Money Meltdown". The article is entitled "Russia Needs a New Currency".

In that article she says:
"Under a currency board arrangement, governments lose the ability to
excercise discretionary monetary polocy. Money issued by a currency
board is backed 100% by reserves of foreign currency and gold. The
exchange rate between the national money and the reserve currency
does not gyrate according to the fickle sentiments of investors or
jawboning by government officials, but is guarrenteed by law....The
hallmark of a currency board is that it works automatically; the
national money supply expands or contracts through the inflow or
outflow of reserves."

She goes on to explan the IMF's reluctance to use currency boards,
"Such monitary straightforwardness makes the IMF bureaucrats uneasy.
They are inclined to use the value of moneyas a tool for manipulating
financial incentives and human behavior...."
It is an excellant article

Below this article, Mr. Yam makes these statements:
"...speculators [in future markets] have manipulated our currency-board
system in order to reep hudge profits in stock index futures. We have no
objection to anyone, including hedge funds, taking short positions in
stock index futures, so long as they are reacting to economic realities...
Furthermore, the actions of currency speculators can be blamed for a
significant part of the interest rate premium in the Hong Kong dollar
over the U.S. dollar."

He goes on to explan that situation....well worth the read.
Chip

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