Thus that part of the monetary base represented by the clearing balance of the banking system was initially not subject to the discipline imposed by a currency board system.
These reform measures subjected this crucial part of the monetary base to the discipline of the currency board arrangement and strengthened the linked exchange rate system.
The monetary base increases when the foreign currency (in Hong Kong's case, US dollars) to which the domestic currency is linked is sold to the currency board for the domestic currency (inflow into Hong Kong dollars).
But one thing remains unchanged: the Fed's monetary base remains as stable as Mount Tai.
adjustment of monetary base
