HKMA Sets Out Work Priorities for 2022

As per the annual report, HKMA plans to:

• Implement the revised capital standards set out in the final Basel III reform package and propose amendments to the capital rules in parallel with relevant changes to the Banking (Exposure Limits) Rules. HKMA further intends to make corresponding amendments to the Banking (Disclosure) Rules to implement the new or revised disclosure requirements associated with the revised capital standards in the Basel III final reform package.
• Update certain Supervisory Policy Manual modules, including those on countercyclical capital buffer, interest rate risk in the banking book, stress testing, code of conduct, reporting requirements, exposures to connected parties, and large exposures.
• Continue to monitor authorized institutions’ progress in transitioning away from the remaining London Interbank Offered Rate (LIBOR) settings before these settings cease to be published by June 30, 2023.
• Continue its multi-year program to build an operational resolution regime for authorized institutions. HKMA prioritizations will include finalizing and consulting on liquidity reporting and estimation capabilities of authorized institutions, continuity of access to FMIs in resolution, advancing bilateral resolution planning programs with domestic systemically important banks, advancing development of preferred resolution strategies for locally incorporated authorized institutions other than domestic systemically important banks, and contributing to international policy developments and implementation monitoring at the Financial Stability Board on its resolution-related priorities, including the implementation of total loss-absorbing capacity standard, bail-in execution, and good practices of Crisis Management Groups.
• Implement a wider range of risk-sensitive supervisory techniques, by leveraging enhanced data and supervisory technology (suptech) capabilities and promoting the use of regtech by banks, including transaction monitoring systems. HKMA will also work on understanding the evolving money laundering and terrorist financing risks, implementing changes to the anti-money laundering law and related guidance to align with international standards while maintaining proactive engagement with other regulators and international standard setters.
• Promote the all-round adoption of fintech by banks, as part of its “Fintech 2025” strategy. HKMA will continue to facilitate the digitalization of banks’ operations and adoption of regtech, strengthen its research efforts on wholesale and retail Central Bank Digital Currencies, explore next-generation data infrastructure to enable more efficient financial intermediation, and enhance the fintech talent pool. HKMA will carry on its research into emerging technologies such as federated learning, blockchain, and crypto-assets, particularly payment-related stablecoins. On the adoption of suptech, HKMA will continue its work on building an end-to-end digital supervisory platform.
• Issue guidance in respect of new service models, such as “buy now, pay later,” and will continue to work on introducing more than one consumer credit reference agency in Hong Kong. HKMA will monitor the industry’s implementation of measures recommended in guidelines issued by Hong Kong Association of Banks (HKAB)—namely, the Practical Guideline on Barrier-free Banking Services, the Guideline on Banking Services for Persons with Intellectual Disabilities, and the Guideline on Banking Services for Persons with Dementia.
• Progress toward aligning its disclosures with recommendations of the Taskforce on Climate-related Financial Disclosures no later than 2025. HKMA will also continue to collaborate on cross-sectoral issues including capacity building, green and sustainable finance data, taxonomies, climate-related disclosures and sustainability reporting, as well as carbon market opportunities.

Keywords: Asia Pacific, Hong Kong, Banking, Annual Report, Basel, ESG, Fintech, Regtech, Suptech, Stablecoins, Crypto-Assets, ML TF Risk, Disclosures, Countercyclical Capital Buffer, Interest Rate Risk, Stress Testing, Reporting, CBDC, Sustainable Finance, TCFD, Climate Change Risk, HKMA