| Abstract: | Hong Kong initially emerged relatively unscathed from the East Asian financial crisis of 1997–1998 and was able to defend the pegged exchange rate on which its status as an international financial centre depended. The soundness and transparency of the financial system is widely credited with allowing Hong Kong to avoid the worst excesses that brought down financial systems elsewhere. This article explores the evolution of the regulatory framework in the post-war period, revealing the reluctance with which the state tightened its control over the banking system. This resulted in the combination of poor supervision and constraints on competition that contributed to further instability. |
