Hong Kong’s Approach to Financial Stability
AbstractThis article summarizes the characteristics of Hong Kong’s approach to financial stability. It starts with an introduction to the macroeconomic policy setting and with a conceptual discussion on why financial cycles are likely to be an intrinsic feature of market economies. It then outlines the author’s interpretation of the regulatory and supervisory philosophy in Hong Kong and describes in more detail the framework and conduct of macroprudential policies regarding housing market risks. The financial policy framework in Hong Kong emphasizes the importance of limiting the degree of leverage on the balance sheets of both the private and public sectors so that households, firms, and the government can weather financial cycles. Hong Kong’s approach to financial stability therefore has two broad elements: first, macroprudential measures to lean against credit growth and the buildup of leverage in the upswing phases of financial cycles; and secondly, contingency planning and stress testing to ensure that participants in the financial system would be able to survive as going concerns in the downswing phases of financial cycles.
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Bibliographic InfoArticle provided by International Journal of Central Banking in its journal International Journal of Central Banking.
Volume (Year): 9 (2013)
Issue (Month): 1 (March)
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Web page: http://www.ijcb.org/
Find related papers by JEL classification:
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frank Leung & Kevin Chow & Gaofeng Han, 2008. "Long-term and Short-term Determinants of Property Prices in Hong Kong," Working Papers 0815, Hong Kong Monetary Authority.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
- Abdullah Yavas, 2013. "Asset Price Bubbles and Monetary Policy," Working Papers 102013, Hong Kong Institute for Monetary Research.
- Kristin Forbes & Marcel Fratzscher & Roland Straub, 2013.
"Capital Controls and Macroprudential Measures: What Are They Good For?,"
Discussion Papers of DIW Berlin
1343, DIW Berlin, German Institute for Economic Research.
- Forbes, Kristin & Fratzscher, Marcel & Straub, Roland, 2014. "Capital Controls and Macroprudential Measures: What Are They Good For?," CEPR Discussion Papers 9798, C.E.P.R. Discussion Papers.
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