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Hong Kong cuts banks' required capital buffers

The Hong Kong Monetary Authority slashed the countercyclical capital buffer for banks to 2.0% from 2.5%, effective immediately, to help prop up the economy amid months of social unrest.

HKMA Chief Executive Eddie Yue said Oct. 14 that the decision would allow banks to release an additional HK$200 billion to HK$300 billion in bank credit, which he hopes would be used to support small and midsize enterprises.

Yue said Hong Kong's economic environment has "deteriorated significantly" since June. Allowing banks to release more liquidity would help mitigate the economic cycle, he added.

The decision follows a report that the regulator and local banks are considering measures to aid small businesses hit by ongoing protests in the city.

Meanwhile, Yue reiterated that the city's "banking system is robust and sound," and is "well positioned to withstand market shocks." He made the comments to address what he called "vicious" rumors about Hong Kong's monetary and financial stability.