finance industry

Easing Hong Kong’s COVID-19 curbs, opening China border top bankers’ wish list

Reuters
Easing Hong Kong’s COVID-19 curbs, opening China border top bankers’ wish list

HKMA. Eddie Yue, chief executive of the Hong Kong Monetary Authority, poses for a picture during an interview with Reuters in Hong Kong, November 4, 2022.

Tyrone Siu/Reuters

Hong Kong has seen an exodus of talent over the past year, with many residents fed up with relentless COVID-19 controls

HONG KONG – Global executives want to see a further easing of Hong Kong’s COVID-19 restrictions and it’s crucial for the China border to reopen so the financial hub can reconnect with the mainland, the head of the city’s de facto central bank told Reuters.

Speaking on the city’s currency peg to the US dollar, Eddie Yue, chief executive of the Hong Kong Monetary Authority (HKMA), said that while there was no intention to change the peg, there were always contingency plans.

Yue hosted some of the world’s top banking bosses at a business conference last week aimed at rebooting Hong Kong’s status as a premier financial center.

The former British colony has seen an exodus of talent over the past year, with many residents fed up with relentless COVID-19 controls that have seen scores of events canceled, postponed, or rerouted to other Asian cities.

Anti-government protests in 2019 and a national security law imposed by Beijing in 2020 have also clouded Hong Kong’s image.

“In the case of Hong Kong, everyone hoped there could be further relaxations,” Yue said, referring to some of the main messages relayed to him by executives, adding that he hoped the border with China would open “very soon.”

“I hope the process can be faster. I understand the Hong Kong government is already in very intensive talks with the mainland authorities on that,” Yue said in an interview at the HKMA office on Friday, November 4.

The Hong Kong government has said it’s working towards lifting COVID-19 rules. The requirement for hotel quarantine on arrival has ended, but international visitors are banned from bars and restaurants for their first three days, among other measures.

While Hong Kong’s currency regime is under significant pressure, caught between the United States and China, Yue said the HKMA was prepared for worst-case scenario.

“As with any other central bank, risk assessment and risk preparation is in our DNA. So we basically prepare for anything. Any worst-case scenario…. It’s like we stress test the banks, we stress test ourself as well,” he said.

Hong Kong’s aggregate balance – the key gauge of cash in the banking system – has fallen below HK$100 billion for the first time in two years after multiple interventions to stop the local currency from breaking below its peg to the US dollar.

At the business summit last week, Chinese regulators had made it clear that they value Hong Kong for acting as a springboard to the mainland and were committed to supporting the city’s role as a financial center, Yue said.

“Hong Kong has a very unique advantage, which is the connection between the world and China…. This role belongs to Hong Kong.” – Rappler.com

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