Hong Kong Monetary Authority (HKMA), the central bank of the city, has updated its funding framework to assist banks in the event of a liquidity crisis.

The regulator has unveiled four ways through which banks can borrow money from the HKMA in case of a crunch. These include settlement facilities, standby liquidity facilities, contingent term facility, and resolution facility.

Go deeper with GlobalData

Premium Insights

The gold standard of business intelligence.

Find out more

Through settlement facilities, banks can secure overnight liquidity. Using standby liquidity facilities, banks can get liquidity for up to one month.

Contingent term facility can be used in cases where a bank suffers “extraordinary liquidity stress” and is unable to sort out the issue through market funding or other means.

It will also be offered in those circumstances where the regulator feels that the bank’s problems could affect the systemic stability of the city as a whole.

Resolution facility can be availed when HKMA assumes control of a troubled bank. The resolution facility can last until the bank is able to regain market funding.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

HKMA CEO Norman Chan said: “The updated Liquidity Facilities Framework makes operational an important part of the resolution regime in Hong Kong and takes forward a key recommendation of the Financial Stability Board’s 2018 Peer Review of Hong Kong.

“The framework outlines the facilities that are already in place, as well as the newly introduced Resolution Facility, in a systematic way so as to foster a better understanding of the different ways that liquidity may be made available to banks by the HKMA. This is part of our ongoing work to maintain the integrity and stability of the monetary and financial systems of Hong Kong.”