Policy Address

Banking Supervision

26.        The financial crisis has prompted international organisations and various economies to co-operate and recommend ways to strengthen the future stability of financial markets.  To boost the resilience of financial institutions, the HKMA will strengthen the supervisory framework for liquidity risk management for authorized institutions, and revise the methodology for calculating capital adequacy ratios in accordance with the latest guidelines and recommendations of the Basel Committee on Banking Supervision.

*27.        The HKMA will strengthen stress tests, capital planning and management of off-balance sheet exposures, and encourage a more complete disclosure of risk information.  As precautionary measures to safeguard banking stability in Hong Kong and boost public confidence, the Financial Secretary announced yesterday the use of the Foreign Exchange Fund, on a special and time-limited basis, to establish a Contingent Bank Capital Facility to make available additional capital to locally incorporated licensed banks when necessary.  Besides, the Fund will be used to guarantee, with immediate effect, the repayment of all customer deposits.  These two measures will remain in force until the end of 2010.  Meanwhile, the Hong Kong Deposit Protection Board will continue to review the coverage and compensation limit of the Deposit Protection Scheme, and provide feasible long-term proposals to better protect depositors in the long run.

*The speech delivered by the Chief Executive is different from the printed text.

 

 

 

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