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Bloomberg
Hong Kong took measures on Monday to help banks put more money in the hands of local businesses in a move to shore up the city’s deteriorating economy after months of unrest.
The Hong Kong Monetary Authority, which operates like a de facto central bank, said it would reduce the amount of capital lenders have to maintain. The move is intended to make it easier for banks to lend to small and medium size businesses, which have been hit by months-long protests that have caused a precipitous drop in tourism, retail sales and property values.
The so-called counter-cyclical capital buffer was lowered to 2% from 2.5% with immediate effect, the authority said in a statement on Monday. The cut will allow banks to release an additional HK$200 billion to HK$300 billion ($25 million to $38 million) of credit, HKMA Chief Executive Eddie Yue said in a separate letter.
“We hope that banks will make good use of the newly released headroom to support SMEs,†Yue said. Hong Kong’s economic environment has “deteriorated significantly†since June, he said.