Twenty years after the handover of Hong Kong to China from Britain, it is time for a radical rethink of the local currency's peg to the dollar. A new regime pegging the Hong Kong dollar to a basket composed of the dollar and euro would better serve the self-governing territory's emerging needs.
The Hong Kong economy has changed enormously since it was handed back to China by the U.K. in 1997, but its currency has remained pegged to the dollar and subject to the tight regime of a currency board. With the economy now more synchronized with China than ever before, the dollar peg may no longer provide an accurate reflection of the real value of the Hong Kong dollar.
