March 16, 2020 / 4:50 AM / 13 days ago

Hong Kong reduces countercyclical capital buffer

HONG KONG, March 16 (Reuters) - Hong Kong’s central bank said on Monday it reduced with immediate effect the countercyclical capital buffer it required financial institutions to hold from 2% to 1% of their risk-weighted assets.

The Countercyclical Capital Buffer is part of the Basel III regulatory capital framework and aims to build up additional capital during periods of excessive credit growth.

This capital can then be released when the credit cycle turns to absorb losses and enable the banking system to continue lending in the subsequent downturn.

Reporting by Donny Kwok and Marius Zaharia; Editing by Christian Schmollinger

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