The Financial Institutions (Resolution) Ordinance (FIRO), which came into effect on 7 July 2017, establishes the legal basis for a cross-sectoral resolution regime in Hong Kong which is designed to be compliant with the international resolution standards set out in the Financial Stability Board’s (FSB) Key Attributes of Effective Resolution Regimes for Financial Institutions (Key Attributes). Under the FIRO, the Monetary Authority (MA) is the resolution authority for banking sector entities which include all authorized institutions (AIs).
Many financial institutions operate across different sectors. According to the FIRO, the MA is also designated as the lead resolution authority, with lead responsibility for the resolution planning, and, if needed, resolution execution of all of the existing cross-sectoral groups in Hong Kong that include banking sector entities.
The Resolution Office within the HKMA is responsible for the implementation of the resolution regime for AIs. It is operationally independent and has a direct reporting line to the Chief Executive of the HKMA (i.e. the MA).
As the resolution authority for AIs, the MA is responsible for:
The FSB conducted a Peer Review of Hong Kong which covered, among other things, Hong Kong’s resolution regime and published its report in February 2018. The report confirmed that, with the introduction of the resolution regime under the FIRO and associated regulations, Hong Kong has legal powers and safeguards related to resolution that are consistent with the requirements of the Key Attributes. The report also observed that Hong Kong is one of the few FSB jurisdictions with a fully cross-sectoral resolution regime.
In addition, the International Monetary Fund published, in June 2021, a Financial System Stability Assessment with Hong Kong SAR and highlighted, among other things, that the introduction of a clear and comprehensive resolution regime under the FIRO has significantly strengthened the crisis management arrangements of Hong Kong.