Hong Kong’s payment systems allow interbank transfers in the Hong Kong dollar, US dollar, euro, and renminbi. Interbank payments history of international monetary system pdf settled continuously on a deal-by-deal basis across the book of the HKMA without netting.
The Hong Kong dollar RTGS system has a single-tier membership structure. With the Exchange Fund Ordinance providing the legal basis for access to the system, licensed banks in Hong Kong are required to join the system and maintain Hong Kong dollar settlement accounts with the HKMA. August 2000 with The Hongkong and Shanghai Banking Corporation as its settlement institution. The US dollar RTGS system not only processes US dollar interbank payments on an RTGS basis, but also handles US dollar bulk clearing and settlement of cheques and stock market-related payments. Banks in Hong Kong are entitled to access the system and can apply for direct membership through the settlement institution or indirect membership by settling their payments through direct members.
Participation of other financial institutions has to be approved by the HKMA and the settlement institution on a case-by-case basis. Banks in Hong Kong and elsewhere can join the system directly by opening renminbi settlement accounts with the Clearing Bank. Non-local banks and financial institutions can also choose to join the system indirectly by settling their payments through direct members in Hong Kong. While banks in Hong Kong can apply to the Clearing Bank for direct access to the system, participation of other financial institutions has to be approved by the HKMA and the Clearing Bank on a case-by-case basis. Prior to the introduction of the RTGS system in 1996, banks settled payments among themselves by way of position netting. Such position netting was not obligatory and not supported by a formal legal framework as in the case of obligation netting. In an RTGS system, large-value interbank payments are settled on a continuous, deal-by-deal basis through the banks’ settlement accounts with the settlement institution of the system.
As these payments are settled one by one during the day, systemic settlement risks arising from end-of-day netting are eliminated. As opposed to position netting, RTGS requires banks to have more intraday liquidity to settle payments during the day. Banks in Hong Kong can obtain interest-free intraday liquidity through intraday repurchase agreements with the HKMA using Exchange Fund Bills and Notes. PvP is a mechanism for settling a foreign exchange transaction where payments in the two currencies involved are settled simultaneously. Hong Kong dollar foreign exchange transactions on a PvP basis. The settlement of transactions made through the Hong Kong dollar, US dollar, euro and renminbi RTGS systems is final and irrevocable.
This finality is protected from insolvency laws and other laws by the Payment Systems and Stored Value Facilities Ordinance. The HKMA has introduced a number of improvements to the RTGS systems over the years to smooth payment flows and enable banks to use liquidity more efficiently. It ensures access to other peoples’ raw materials and infrastructure on the cheapest possible terms. Dozens of countries must compete for shrinking export markets and can export only a limited range of products because of Northern protectionism and their lack of cash to invest in diversification. Market saturation ensues, reducing exporters’ income to a bare minimum while the North enjoys huge savings. Their programs have been heavily criticized for many years for resulting in poverty. In addition, for developing or third world countries, there has been an increased dependency on the richer nations.
This is despite the IMF and World Bank’s claim that they will reduce poverty. IMF and World BankIMF and World Bank Reform? The role of the state is minimized. Privatization is encouraged as well as reduced protection of domestic industries. Other adjustment policies also include currency devaluation, increased interest rates, flexibility of the labor market, and the elimination of subsidies such as food subsidies. To be attractive to foreign investors various regulations and standards are reduced or removed.
The impact of these preconditions on poorer countries can be devastating. Poor countries must export more in order to raise enough money to pay off their debts in a timely manner. Because there are so many nations being asked or forced into the global market place—before they are economically and socially stable and ready—and told to concentrate on similar cash crops and commodities as others, the situation resembles a large-scale price war. Then, the resources from the poorer regions become even cheaper, which favors consumers in the West. These nations are then told to peg their currencies to the dollar. But keeping the exchange rate stable is costly due to measures such as increased interest rates. 99, or in Mexico, Brazil, and many other places.
When IMF donors keep the exchange rates in their favor, it often means that the poor nations remain poor, or get even poorer. Millions of children end up dying each year. Competition between companies involved in manufacturing in developing countries is often ruthless. We are seeing what Korten described as a race to the bottom.
With each passing day it becomes more difficult to obtain contracts from one of the mega-retailers without hiring child labor, cheating workers on overtime pay, imposing merciless quotas, and operating unsafe practices. 103This is one of the backbones to today’s so-called free trade. In this form, as a result, it is seen by some as unfair and one-way, or extractionalist. As a result, policies such as Structural Adjustments have, as described by Smith, contributed to the greatest peacetime transfer of wealth from the periphery to the imperial center in history, to which we could add, without much media attention.