John Greenwood, the architect of Hong Kong's dollar peg, says fears over drawing HK$150 billion from the Exchange Fund for infrastructure are overblown. He argues the move poses no threat to the monetary system and represents a legitimate long-term investment.
John Greenwood, known as the “father of the city’s dollar peg”, told the South China Morning Post that Hong Kong has adequate safeguards to prevent misuse of the Exchange Fund, a de facto sovereign wealth fund. He described concerns over the government's decision to draw HK$150 billion (US$19.1 billion) from it as “a little overblown”.
The fund plays an essential role in defending the Hong Kong dollar’s peg to the US dollar, but Greenwood said the transfer would have no effect on the monetary system. He added that it was “legitimate” to justify the move as a reallocation from financial investments to infrastructure projects that would generate economic returns.
“The [Hong Kong] government has always been very prudent, careful, conservative. So I’d be really surprised if this was a break with that tradition,” Greenwood said.
“It just seems to me that … this does not threaten the monetary system in any way.”
Greenwood is credited as the driving force behind the peg, after an article he wrote in 1983 formed the basis for the policy linking the local currency to the US dollar.
