2020 has been an eventful year, although we are just halfway through. Outbreak of the new coronavirus, which swept across the globe, has significantly impacted the global economy, and Hong Kong is no exception. But thanks to our vigilant community, efficient health system and suitable social distancing measures, we are among the first to have stabilised the local epidemic situation. Meanwhile, our financial system continues to perform in an orderly manner during the outbreak. This is no coincidence. The stable environment brought about by the effective community response and administrative measures during the pandemic proves to be a strong anchor for our financial system in time of crisis. This, together with our robust financial infrastructure, sound regulatory system, extensive expertise as well as strong buffers we have built up over the years, underpins our resilience as an international financial centre.
Last week, the National People’s Congress announced a legislative proposal on establishing and improving the legal system and enforcement mechanisms for Hong Kong to safeguard national security. Stakeholders in the financial sector may wonder what implications, if any, this legislative proposal may have on Hong Kong’s financial system. In essence, the proposal will not bring any changes to the fundamentals of our monetary and financial system. More specifically,
Despite the recent volatility in the stock market, the Hong Kong dollar exchange rate has remained stable and on the strong side of the convertibility zone. Interest rates have stayed low. Financial markets have also been operating in a smooth and orderly manner. There has not been noticeable sign of fund outflow from either the Hong Kong dollar or banking system. Nevertheless, we are mindful that challenging times could breed rumours that seek to trigger market volatilities, undermine market confidence and threaten financial stability. The HKMA will stay highly vigilant and act swiftly to dispel unfounded rumours. Indeed, one should look beyond short term market volatilities, and always bear in mind the strong fundamentals and strengths that make Hong Kong what it is today.
More importantly, the Central People’s Government and the HKSAR Government have emphasised that “One Country, Two Systems” will remain intact, the legitimate rights and freedoms enjoyed by Hong Kong residents will not be affected, and the legitimate interest of foreign investors will continue to be protected by the law. Indeed, a safe and stable environment is conducive to fostering investors’ confidence in the long term.
As Hong Kong is finding its way out of the economic doldrums caused by the novel coronavirus, a safe and stable environment is much needed for businesses to recover and flourish. Let us not forget the fact that Hong Kong has stood the test of time as an international financial centre, riding through countless storms and difficulties in the past by leveraging on our strong fundamentals. The financial and banking sectors have made significant contributions during this process. You can rest assured that the HKMA has the capability, resources and commitment to safeguard Hong Kong’s continued monetary and financial stability.
Hong Kong Monetary Authority
26 May 2020