Hong Kong regulator to allow foreign currency liquid assets to make up LCR shortfall

Hong Kong harbour

The Hong Kong Monetary Authority (HKMA) has indicated it will allow Hong Kong banks to use foreign currency liquid assets to meet the requirements of the Basel III liquidity coverage ratio (LCR), given that both sovereign and local currency denominated high-grade corporate debt is in short supply in the Special Administrative Region.

Under the LCR, banks need to have enough high-quality, liquid assets to meet at least 30 days of their net cash outflows under a stress scenario. There are two

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