Government limitations to provide liquidity for AsiaPac banks

Floating exchange rate regimes in Asia Pacific countries give governments flexibility to provide liquidity support to the banks, but not in Hong Kong.

To assess a government’s capacity to provide liquidity for banks in a euro area crisis if needed, Moody's considered the government’s access to financial resources, as measured by two liabilities-to-FX reserves ratios.

According to Moody's Investor Service, "Australia, New Zealand, Hong Kong, Singapore and Japan have large short-term liabilities relative to their FX reserves. However, most of these countries – excluding Hong Kong – adopt floating exchange rate regimes, which give their governments the potential flexibility to provide liquidity support to their systems. Despite Hong Kong’s substantial FX reserves holdings, its ability to provide liquidity is constrained by the currency board mechanism."

Graph from Moody's Investor Service: Assessing the Exposure of Asia Pacific Banks to the Risk of Deterioration in the Euro Area

Also Read

Bangkok Bank logs net profit of $1.05b for 9M 2024

Banks face value creation challenge despite record revenues

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit