Hong Kong Contingent Bank Capital Facility (CBCF)

Abstract

On October 14, 2008, Hong Kong’s financial secretary announced the Hong Kong Monetary Authority (HKMA) would use Hong Kong’s Exchange Fund to provide standby capital to banks if needed. The Contingent Bank Capital Facility (CBCF) was available until the end of 2010 to shore up depositor and investor confidence in the local banking sector and commenced in parallel with a broader set of announced measures including a consumer bank deposit guarantee. Twenty-three locally incorporated “Authorized Institutions” were eligible to access CBCF capital upon request. The provisioning of CBCF capital would be accompanied by enhanced oversight from the HKMA. The Hong Kong government did not formalize the structure or terms of CBCF capital, nor did it expressly define any limits for individual banks or in aggregate. The CBCF never injected any capital and expired as initially scheduled, at the end of 2010.

Keywords: broad-based, capital injections, broad-based capital injections, Contingent Bank Capital Facility, Exchange Fund, Hong Kong, Hong Kong Monetary Authority

JEL Classification: G01,G28