Key Information

inSight
Speeches
Speeches by Speaker
Norman T.L. Chan
Peter Pang
Eddie Yue
Arthur Yuen
Zeti Akhtar Aziz
Raymond Li
Edmond Lau
Esmond Lee
Meena Datwani
Vincent W.S. Lee
James Lau
Joseph Yam
Y K Choi
William Ryback
David Carse
Tony Latter
Andrew Sheng
Hans Genberg
Simon Topping
Michael Taylor
The Honourable Donald Tsang
Chen Yuan
Dai Xianglong
Don Brash
Jaime Caruana
Andrew Crockett
Mario Draghi
David Eldon
Stanley Fischer
Timothy F. Geithner
Stephen Grenville
Kenneth G. Lay
William McDonough
Ernest Patrikis
Glenn Stevens
Jean-Claude Trichet
Tarisa Watanagase
Zeti Akhtar Aziz
Carmen Chu
Alan Au
Press Releases
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
Press Releases by Category
Bogus Voice Message Phone Calls
Banking in Hong Kong
Fraudulent Websites, E-mails and Telephone System, and other fraud cases
Granting of Banking Licences
Exchange Fund
Table of Multiples of Notes and Payments for Allotted Amount under non-competitive tender
Table of Multiples of Notes and Payments of Application Amount under non-competitive tender
Tender of Exchange Fund Bills and Notes
Tender Results of Exchange Fund Bills and Notes
Tentative Issuance Schedule for Exchange Fund Bills and Notes
Appointments and Departures
HKMA Pay Review
HKMA Publications
Speeches
The Hong Kong Mortgage Corporation
Hong Kong Note Printing Limited
Hong Kong Institute for Monetary Research
Exchange Fund Investment Limited
Others
Hong Kong Financial Infrastructure
International Relations
Investment Products Related to Lehman Brothers
Monetary Policy
Notes and Coins
Renminbi business
Credit Card Lending Survey
Monetary Statistics
Residential Mortgage Survey
Year 2000
Others
Guidelines and Circulars
Guidelines
Circulars
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
515.5995

Press Releases

Liquidity Arrangements for the Money Market in the Y2K Context

The Hong Kong Monetary Authority ("HKMA") announced today (6 September) the introduction of an enlarged Discount Window and a term repos facility in the fourth quarter of 1999 to address the potential problem of excessive tightness in the money market which might arise from Y2K related concerns.

The enlarged Discount Window will be available from 15 November 1999 to 31 January 2000. It will increase the amount of HKD liquidity that can be obtained by licensed banks through the Discount Window by temporarily removing existing restrictions and the HKMA accepting a wider range of debt securities as eligible collateral:

  1. For existing categories of eligible paper, the whole of a bank's holdings is discountable at Base Rate (or, for certain categories, Base Rate plus 1/4%) - i.e. the 5% premium on the second 50% of holdings is suspended.
  2. The repeated borrowing restriction on the use of non-Exchange Fund ("EF") paper is suspended.
  3. The "grandfathered issues only" rule for certain non-EF paper is suspended; i.e. non-EF public sector paper and AAA-rated issues in CMU will be eligible on the same basis as grandfathered issues, even if issued since September 1998.
  4. Other investment grade or higher HKD paper in CMU will also be eligible, but in this case HKMA will have discretion over the interest rate, up to a maximum of the higher of Base Rate plus 5 1/2% and overnight HIBOR.

At its discretion, the HKMA will be willing to respond to requests for access to overnight lending through the Discount Window at any time during business hours. This flexibility will enable the HKMA to pre-empt any gridlock in the payment system that could arise due to excessive tightness in the money market prior to the normal opening of the Window.

The term repos facility will be available from 1 December 1999 to 31 January 2000. The facility allows licensed banks to obtain in advance HKD liquidity from the HKMA for the year-end at a known price. The facility will help to remove uncertainty on the availability of HKD liquidity near the year end. It is structured as follows :

Form Repos providing HKD against Exchange Fund paper or, subject to satisfactory delivery, against US Treasuries and other AAA rated USD paper.
Maturity Continuous offer by HKMA of 7-day, 14-day and one-month repos
Interest rate HIBOR for relevant term or HKMA Base Rate plus 1/4%, whichever is the higher.
Normal limits For HK-incorporated banks, subject to, and counting towards, lender-of-last-resort limits as specified in recent policy statement (up to 200% of capital base, with cap of $10 billion). For branches of foreign banks, up to10% of HK dollar assets, with cap of $10 billion.

 

"The two measures are consistent with the approach being adopted by other international financial centres in tackling Y2K related issues. There is broad agreement that central banks should stand ready to be more flexible in their money market operations - for example by accepting a wider range of collateral or by departing temporarily from normal rules about interest charges if necessary," said Mr. Tony Latter, Deputy Chief Executive of the HKMA.

"We expect that the announcement on these two measures should pre-empt some of the potential pressures in the interbank markets. However, should conditions demand, the HKMA stands ready to commence these arrangements earlier, or extend the finishing date, or even to start them earlier but only on a temporary basis. On the other hand, to prevent possible abuse of the measures, for example to fund speculative outflows, the HKMA reserves the right to suspend or amend these special arrangements if the external situation so requires," added Mr. Latter.

 

Hong Kong Monetary Authority

6 September 1999

Last revision date: 1 August 2011
ABOUT THE HKMA
The HKMA
Tender Invitations
Careers@HKMA
Legislative Council Issues
Links
The HKMA Information Centre
KEY FUNCTIONS
Monetary Stability
Banking Stability
International Financial Centre
Exchange Fund
PUBLICATIONS & RESEARCH
Annual Report
Half-Yearly Monetary & Financial Stability Report
Quarterly Bulletin
HKMA Background Briefs
Reference Materials
Research
MARKET DATA & STATISTICS
CMU Bond Price Bulletin
Economic & Financial Data for Hong Kong
Monthly Statistical Bulletin
Monetary Statistics
KEY INFORMATION
Press Releases
Speeches
Guidelines & Circulars
Forthcoming Events
inSight
OTHER INFORMATION
Information in Other Languages (Bahasa Indonesia, हिन्दी, नेपाली, ਪੰਜਾਬੀ, Tagalog, ไทย, اردو)
Account Opening
Consumer Corner
Consumer Education Programme
Complaints about Banks
Complaints about SVF Licensees
Internet Banking
Fraudulent Bank Websites, Phishing E-mails and Similar Scams
Be Careful of Bogus Phone Calls and SMS Messages
Authenticate the Callers and Bank Hotline Numbers
Register of AIs & LROs
Register of Securities Staff of AIs
Register of SVF Licensees
Investment Products Related to Lehman Brothers
Photo Gallery