On the morning of Dec. 1, John Greenwood, chairman and chief economist of G.T. Capital Management Inc., will cross through the gates of Buckingham Palace, enter a special room in the palace, and be invested as an Officer of the Order of the British Empire by Queen Elizabeth II.
Mr. Greenwood is being recognized for "saving" the Hong Kong dollar in 1983 and for other contributions to that British crown colony.
The designation isn't as lofty as peerage (which entitles the holder to a seat in the House of Lords) or knighthood. As Mr. Greenwood quips, the OBE award rates "second from the bottom of the English aristocracy," just ahead of Member of the British Empire.
Nonetheless, his award reflects Mr. Greenwood's significant contributions to Hong Kong's economy. During his 19 years in that colony - all of them as an employee of San Francisco-based G.T. Capital - Mr. Greenwood's public service contributions included serving as a director of the Hong Kong Futures Exchange Clearing Corp., a member of the Council of the Hong Kong Stock Exchange, an adviser to the Economic Advisory Committee of the Hong Kong government and a member of the law reform commission.
But it was his plan to save the Hong Kong currency that far and away distinguished him. In 1983, as Hong Kong's dollar was in a free-fall, Mr. Greenwood proposed the solution that permanently corrected the problem.
At the time, Hong Kong had a floating-rate currency, no central bank and wide fluctuations in monetary growth. The currency was collapsing as it became likely that Hong Kong would be returned to Chinese sovereignty.
Writing in the September 1983 edition of G.T.'s Asian Monetary Monitor, Mr. Greenwood proposed stabilizing the local currency by pegging it to the U.S. dollar. The idea: banks could only issue Hong Kong dollar bank notes in exchange for payment of U.S. dollars at a rate of 7.8 Hong Kong dollars to one U.S. dollar. They also would be able to redeem Hong Kong currency at the same rate. A governmental currency board would administer the program.
Before Mr. Greenwood published this idea, he sent a copy of it to government officials in Hong Kong. On Saturday Sept. 24, the Hong Kong dollar effectively collapsed; the next day, government officials summoned Mr. Greenwood to an emergency meeting on the currency. It took another three weeks, but on Oct. 17, 1983, Hong Kong officially implemented Mr. Greenwood's currency stabilization plan.
The result? The currency immediately stopped falling in value. On a monthly basis, the inflation rate, then in the high teens, also fell, Mr. Greenwood recalls. On a long-range basis, the dollar peg has enabled Hong Kong's currency to weather political and economic gyrations - even the formal announcement in 1984 that Hong Kong would indeed return to Chinese hands.
Mr. Greenwood didn't invent the currency board arrangement, a mechanism some British colonies had used before. But the notion of pegging the currency to the U.S. dollar was his. Similar dollar-peg mechanisms since have been adopted successfully by Argentina, Lithuania and Estonia.
What's more, Mr. Greenwood believes the plan could be a savior for Russia's ruble, which recently has plummeted in value. "A currency board program enables a country to fix its currency, open capital markets and have free trade - all in one shot," Mr. Greenwood points out. And, unlike in Russia, where the central bank prints money to pay the federal budget deficit, "a currency board can't print money to finance a budget deficit," he adds.
A global economist, Mr. Greenwood has a wide perspective and broad experience. Before joining G.T., he spent four years as a post-graduate student at the University of Tokyo.
Later, he translated into English the book "Money and Banking in Contemporary Japan" by Yoshio Suzuki, who was head of research at the Bank of Japan. The book was then published by Yale University Press. During his career, Mr. Greenwoood twice worked at the Bank of Japan as a summer fellow.
As G.T.'s chief economist, he oversees teams of economists in Hong Kong, covering Asia, and in London, covering the United Kingdom and Europe. Analysis of Latin American economies is his handiwork. He also edits three G.T. bimonthly publications, Global Trends, Emerging Market Trends and the Asian Monetary Monitor.
As for the queen's award, Mr. Greenwood says: "It just happened that I was the right person at the right time with the right qualifications" to set Hong Kong's currency straight.
But, "what this award recognizes is that, although I was in the private sector, I was doing something valuable for the community rather than just serving G.T.'s clients," says Mr. Greenwood, who is a British citizen.
"I could have just analyzed the fall of the Hong Kong dollar, shorted it and we'd have made a lot of money." Instead, he put the public's interest first.