ABSTRACT
This chapter shows how the government should manage the anticipated rise in unemployment, assesses the usefulness of the Hong Kong government's (HKSAR) proposed measures to cope with the crisis, and suggests other viable options. It argues that the conservative outlook of senior government officials to maintain the big market, small government, neo-liberal, positive non-intervention economic policy is reactive to meet this enormous challenge. Hong Kong used the Exchange Fund to guarantee repayment of all Hong Kong dollars and foreign-currency deposits held in all authorized banking institutions in the HKSAR, and established a Contingent Bank Capital Facility for the purpose of making available additional capital to locally incorporated licensed banks. However, the banking sector still has been forced to lay off its staff at various intervals since October 2008. A two-pronged economic strategy, which encourages a domestic market for manufacturing outputs and social development employment projects, provides a better buffer in the event of global financial crises.
