Bilateral repurchase agreement signed between Korea and Hong Kong

The Hong Kong Monetary Authority (HKMA) and the Bank of Korea (BOK) jointly announced today (27 January) that a bilateral repurchase (repo) agreement between the two central banking institutions has been signed.

The bilateral repo agreement with the BOK is HKMA's ninth such agreement. The HKMA has earlier signed bilateral repo agreements with central banks from Australia, China, Indonesia, Japan, Malaysia, the Philippines, Singapore and Thailand.

A bilateral repo agreement is a simultaneous agreement to buy securities for an agreed amount of cash and to sell back the same securities at a specific later date for a specified amount. Highly liquid US dollar Government securities are the instruments used in all the repo agreements signed between the HKMA and regional central banks.

Entering into these well secured agreements with central banks, whose credit standing is generally higher than those of private sector banks, would improve the liquidity of the central banks under minimal risk.

Hong Kong Monetary Authority
27 January 1997