Next month, central bankers from around the globe will gather in Hong Kong for a meeting hosted by the Bank for International Settlements (BIS). This marks the first significant international financial event since the city fully re-opened its borders in December after three years of disruption due to the COVID-19 pandemic. The Hong Kong Monetary Authority (HKMA) is preparing for the upcoming Basel Committee on Banking Supervision meeting, with acting deputy chief, Clara Chan, expressing her excitement for the event. Chan encourages other international financial organizations to host events and seminars in Hong Kong and highlighted the HKMA’s plans to enhance cross-border cooperation with visits to Southeast Asia and the Middle East to exchange views with central banks and other financial leaders.
The Basel Committee on Banking Supervision is a leading global standard-setter for the regulation of banks, with 45 members from 28 jurisdictions consisting of central banks and bank supervisors. The BIS, commonly referred to as a “bank for central banks,” was established in 1930 with 63 shareholding central banks. Its purpose is to serve central banks in their pursuit of monetary and financial stability and international cooperation. The BIS set up its Asian office in Hong Kong in 1998 and an innovation hub in 2019.
Eddie Yue Wai-man, CEO of the HKMA, stated that the de facto central bank will host more events this year, including another financial summit in November. The success of the Global Financial Leaders’ Investment Summit in November of last year, attended by over 200 top financiers from across the world, serves as a testament to Hong Kong’s growing reputation as a financial hub. The border re-opening between Hong Kong and mainland China is expected to boost the economy and increase loan demand.
Last year, the Exchange Fund, a currency defense mechanism, reported a record loss of HK$202.4 billion due to plunging stock, bond, and currency valuations. However, CEO Eddie Yue assured the public that the fund still holds over HK$4 trillion, which is sufficient to support the local currency and maintain the peg. The city’s total bank deposits increased by 1.7% last year, with a 0.7% increase in Hong Kong dollar deposits. The value of loans, however, saw a decline of 3% for the first time in two decades, compared to a 3.8% increase in 2021. Arthur Yuen Kwok-hang, deputy CEO of the HKMA, attributes this to a lack of appetite for borrowing money due to the pandemic but predicts that the re-opening of the border will boost the economy and increase loan demand.
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