 Hong Kong: Temporary Liquidity Measures, 2008Benjamin Hoffner ()
Journal of Financial Crises, 2022, vol. 4, issue 2, 897-919 Abstract: In September 2008, Hong Kong's interbank market tightened after the Bank of East Asia experienced a deposit run, prompting the Hong Kong Monetary Authority (HKMA) to roll out five novel liquidity measures. The first three of these measures expanded the scope of HKMA's discount window, offering term loans of up to three months, accepting additional collateral options, and lowering the rate charged. In the last two measures, the HKMA created one facility that allowed banks to request foreign exchange swaps and another that permitted the HKMA to extend collateralized term loans at market rates using its discretion. Although these measures lasted only six months, the HKMA later decided to incorporate the discretionary term lending and forex swap facilities into its permanent monetary policy framework. It allowed discount window lending to revert to its original terms. The HKMA cited greater activity under the discretionary facilities compared to the enhanced discount window as cause for the change in exit strategy. Moreover, during the six-month tenure of the enhanced discount window, banks did not use two of the three enhancements, namely the longer loan terms and expanded collateral options. Keywords: broad-based emergency liquidity; currency board; discount window; HKMA; Hong Kong (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ysm:ypfsfc:v:4:y:2022:i:2:p:897-919 Access Statistics for this article More articles in Journal of Financial Crises from Yale Program on Financial Stability (YPFS) Contact information at EDIRC. |
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