HKMA Reduces Countercyclical Capital Buffer in Hong Kong to 2.0%

In reaching the decision to reduce the Hong Kong jurisdictional CCyB ratio, HKMA reviewed a range of quantitative indicators and qualitative information. This included the “indicative buffer guide” produced by the HKMA Initial Reference Calculator (IRC), which is a metric that takes into account conditions in local credit and property markets. By mapping deviations (gaps) of the ratios of credit-to-GDP and the residential property prices to rentals, from their respective long-term trends to the Basel III CCyB range of 0% to 2.5%, the IRC produces a consistent starting point for further analysis. HKMA also reviewed a series of “Comprehensive Reference Indicators” and all relevant information available at the time of decision. HKMA will continue to monitor credit and economic conditions in Hong Kong closely and the CCyB ratio will be reviewed on a quarterly basis or more frequently.

Effective Date: October 14, 2019

Keywords: Asia Pacific, Hong Kong, Banking, CCyB, Basel III, Banking Capital Rules, Systemic Risk, Macro-Prudential Policy, HKMA