Hong Kong central bank cuts capital buffer of banks to beef up economy
Required cash reserves of banks have been trimmed by the Hong Kong Monetary Authority (HKMA) to make room for an extra HK$200-300 billion ($25.50-38.24 billion) into the money circulation to boost economic growth which has been tormented by the unending mass protests as well as effects of U.S.-China trade conflicts.
On Monday, the central bank of Hong Kong announced that it reduced the Countercyclical Capital Buffer (CCyB) ratio of banks to 2.0% from 2.5% as part of its efforts to beef up activities of small and medium businesses.
“Economic indicators and other relevant evidence have signaled that the economic environment in Hong Kong has deteriorated significantly since June 2019,” the chief executive of HKMA Eddie Yue said.
“Lowering the countercyclical capital buffer at this juncture will allow banks to be more supportive of the domestic economy and help mitigate the economic cycle,” he added.
Hong Kong is now facing a recession after a decade strong economy as the mass protests took its toll. The Hong Kong economy is reduced by 0.4% in April-June.