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January 10, 2018

HKMA announced that the countercyclical capital buffer (CCyB) for Hong Kong will increase to 2.5% from the current 1.875%. The effective date for the new CCyB ratio will be January 01, 2019.

CCyB, which is a part of the Basel III regulatory capital framework, is a mechanism to build up additional capital during periods of excessive credit growth when risks of system-wide stress are observed to be growing markedly. “A continued build-up of the CCyB is warranted in Hong Kong given that key indicators, such as the credit/GDP gap and the property price/rent gap, remain at elevated levels.” Mr. Norman Chan of HKMA said. “In particular, the credit/GDP gap exceeded 19%, suggesting that system-wide risks have not subsided, and the CCyB provides an additional measure of resilience should those risks crystallize.” HKMA will continue to monitor local credit conditions and potential systemic risk build-up in Hong Kong and the CCyB rate will be reviewed on a quarterly basis.

 

Effective Date: January 01, 2019

Keywords: Asia Pacific, Hong Kong, Banking, CCyB, Basel III, Systemic Risk, HKMA

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