HKMA's statement on Liquidity Adjustment Facility

The Hong Kong Monetary Authority (HKMA) would like to remind licensed banks that it does not encourage repeated borrowings by licensed banks through the Liquidity Adjustment Facility (LAF). Each licensed bank must organise their Hong Kong dollar funding prudently and not be overly dependent upon the LAF for last resort liquidity support. In order to discourage licensed banks from repeated borrowings from LAF, penal LAF offer rates different from the advertised LAF offer rate will be determined on a case by case basis and at the absolute discretion of the HKMA for repeated borrowers. These will be communicated to the individual licensed banks concerned.

Hong Kong Monetary Authority

23 October 1997