HKMA Signs Repurchase Agreement with Reserve Bank of New Zealand

Press Releases

26 Mar 1997

HKMA Signs Repurchase Agreement with Reserve Bank of New Zealand

The Hong Kong Monetary Authority (HKMA) and the Reserve Bank of New Zealand (RBNZ) today jointly announced that a bilateral repurchase (repo) agreement between the two institutions has been signed.

The repo agreement was signed today between Mr Joseph Yam, HKMA's Chief Executive and the Governor of the RBNZ, Dr Don Brash.

The agreement provides for either party to sell to the other US Government securities in exchange for cash, while simultaneously agreeing to repurchase those same securities at a specified later date for an agreed amount. In essence, the arrangement allows each organisation to enhance the liquidity of its foreign reserves portfolio with minimal additional risks.

Bilateral repurchase agreements of this sort have become a common feature of the growing ties between the central banks of the Asian region. This is the first such agreement signed by the RBNZ. The HKMA has already signed nine similar agreements with the central banking institutions in the region including Australia, China, Indonesia, Japan, Malaysia, the Philippines, Singapore, Thailand and Korea.

Dr Brash commented, "Seven of New Zealand's top ten export markets are in the Asian region. Central banking organisations provide a vital linkage between nations, and it is important that the RBNZ develops relationships with its Asian counterparts that are reflective of, and supportive of those growing trading, business and financial links."

Mr Yam said, "With the signing of the repo agreement with the RBNZ, the HKMA has entered into similar agreements with all the members of the EMEAP (Executives' Meeting of East Asia and Pacific Central Banks). These agreements help strengthened ties amongst central banks in the region and their ability to maintain currency stability."

Hong Kong Monetary Authority
26 March 1997

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Last revision date : 26 March 1997