The Zhitong Finance App learned that the Hong Kong Government is conducting a public consultation on the “2026 Policy Address”. The Hong Kong Securities and Futures Association (HKSFPA) put forward policy suggestions, calling on the authorities to follow the global trend of “de-dollarization”, include the “reform of the Hong Kong dollar linked exchange rate system” in the scope of long-term policy research, and proposed the establishment of an expert committee to study a moderate expansion of the fluctuation range of HKD 7.75 to 7.85, and gradually establish a “basket of currencies” anchoring mechanism involving RMB, EUR and gold.
The Hong Kong Securities and Futures Association notes that although the Hong Kong dollar linked exchange rate system, which has been implemented since 1983, has been the cornerstone of stable finance for over 40 years, its operating premise is based on “the US dollar being the only core reserve currency in the world.” As US federal government treasury bonds surpass 39 trillion US dollars, interest expenses exceed 1 trillion US dollars in a single year, and central banks around the world continue to reduce their holdings of US debt and switch to gold and local currency settlement, the US dollar is in a “slow recession.”
The Hong Kong Securities and Futures Association believes that the Hong Kong dollar is completely pegged to the US dollar and essentially cedes Hong Kong's monetary policy decisions to the US Federal Reserve. In the past two years, when retail sales were weak and small and medium-sized enterprises were under pressure to do business, Hong Kong was still forced to follow the rapid rate hike of the Federal Reserve, directly increasing the burden on citizens to finance their mortgages; when the Federal Reserve implemented quantitative easing, the influx of hot money could also easily drive up the housing market bubble. This “passive monetary policy” has clearly damaged Hong Kong's economic autonomy. If it sticks to the old system, once the dollar has a credit crisis, Hong Kong's financial market, property market, and public assets will lack buffer space.
In order to deal with long-term currency risks, the Hong Kong Securities and Futures Association proposes a four-point transformation path:
1. Establishment of the “Hong Kong Dollar Monetary System Reform Expert Committee”
Led by the HKMA and the Financial Services and Treasury Bureau, it brings together monetary economists, legal experts and market practitioners, aiming to submit an interim report within 2027. Research interests include:
Broaden the exchange rate range: moderately expand the current 7.75 to 7.85 exchange guarantee range for strong and weak parties to increase the flexibility of exchange rate adjustment
Introduce a basket of currencies: establish a reference mechanism, gradually incorporate assets such as RMB, EUR, and gold, and reduce the single dependency on the US dollar
Preventing speculative shocks: design an orderly transition plan to maintain market confidence and financial stability
2. Accelerate the development of renminbi-denominated financial products
Encourage more Hong Kong stocks, bonds and derivatives to be denominated and settled in RMB, deepen the construction of offshore RMB capital pools, and discuss with mainland regulators to ease restrictions on two-way capital flows, paving the way for a deeper link between the Hong Kong dollar and the RMB in the future.
3. Diversified management of foreign exchange reserves
On the basis of existing US dollar assets, holdings of gold, other major currencies and high-quality sovereign bonds are gradually increased, reserve composition and risk assessments are regularly disclosed to the public, and risk exposure to single assets is reduced.
4. Strengthen public communication and education
It is recommended that the Hong Kong Monetary Authority regularly publish the “Monetary System Stability Report” to explain system risks and reform progress to the market and the public in plain language to prevent unnecessary panic in the market.
Furthermore, the Hong Kong Securities and Futures Association put forward a series of suggestions on the Hong Kong stock settlement system, fair competition in the market, Islamic finance, overseas corporate financing, and digital finance. Among them, in response to the survival difficulties of local small, medium and foreign brokerage firms, the Hong Kong Stock Exchange was urged to abolish the minimum monthly fee, return to “billing according to actual usage”, and supplement it with a prepayment quota mechanism. It also called on the Competition Commission and the Hong Kong Securities Regulatory Commission to intervene to review the use of huge capital to carry out predatory pricing such as “zero commission” and “no platform fees” to prevent price monopolies and maintain the living space of local small and medium-sized brokerage firms.