Author : Editor
The Hong Kong Monetary Authority will loosen the calculation of yuan-denominated assets in the statutory liquidity ratio.
It is a move that will allow local banks to release more yuan for lending.
The liquidity ratio requirement is a measure to ensure banks have enough liquefiable assets that can be turned into cash.
The authority issued a guideline yesterday, letting banks increase the extent of yuan liquid assets in the ratio because "the offshore yuan market in Hong Kong has become more mature after years of development."
The yuan liquidity ratio can now reach at most 150 percent of non-yuan liquidity ratio compared with 100 percent previously, according to the guideline.
Anita Fung Yuen-mei, the Hong Kong chief executive of HSBC (0005), welcomed the authority's decision as it complements January's adjustment to yuan risk management and net open position calculations.
It is also indicative of the maturing yuan market in Hong Kong, Fung said.
The HKMA last month raised the limit on the yuan net open position to 20 percent from 10 percent - a move that helps increase yuan trading activity offshore.
Standard Chartered Bank (Hong Kong) said the decision provides greater flexibility for banks to manage their balance sheets and liquidity ratios as their yuan businesses grow.
Bethy Tam Ho Kam-man, StanChart's head of governance and strategic initiatives, said it also "allows banks to use yuan to a greater extent."
Yuan deposits in Hong Kong have surged in the past few years, although the volume shrank month on month in December to 588 billion yuan (HK$723.8 billion).
To lure more yuan deposits, some lenders have raised interest rates in recent months.
Source : thestandard.com.hk
