The Hong Kong Monetary Authority (HKMA) announced today (Tuesday) five temporary measures for providing liquidity assistance to licensed banks in Hong Kong. With effect from Thursday 2 October for a period of six months until the end of March 2009, the HKMA will provide liquidity assistance, on request from licensed banks, through the following five measures:
An HKMA spokesperson said that the measures were taken in the light of current international financial conditions. They were designed to expand the scope for providing liquidity assistance to licensed banks, should they require it. "Continuing stress in the financial systems of developed markets has caused some concern among licensed banks in Hong Kong over the credit worthiness of each other. This concern, together with a wish to preserve liquidity to meet their own contingent needs, has led to a general shortage of interbank liquidity and difficulties on the part of individual licensed banks in obtaining funding in the interbank market," the spokesperson said. "The five measures will provide further tools for the HKMA to help ensure that Hong Kong's banking system continues to function effectively," the spokesperson added.
The spokesperson said that Hong Kong's banking system continued to be healthy and robust. "The existing framework for maintaining banking stability - including the prudential supervision of banks and the arrangements for providing liquidity both at the systemic and institutional levels - have ensured that the banking system of Hong Kong is well prepared for turbulent conditions," the spokesperson said. "The additional measures are intended to reinforce this framework at a time of instability and stress in the world financial system," the spokesperson added.
The spokesperson advised members of the public to exercise caution in the current uncertain environment. "In view of the situation in the United States and its impact around the world, markets in Hong Kong and throughout the region are likely to be volatile in the future," the spokesperson said. "The HKMA will continue to monitor the situation carefully and will, as necessary, make use of the tools at its disposal to maintain financial stability in Hong Kong," the spokesperson added.
For further enquiries, please contact:
Thomas Chan, Senior Manager (Press), at 2878 1480 or
Peggy Lo, Manager (Press), at 2878 1687
Hong Kong Monetary Authority
30 September 2008