On the 3rd, Yu Weiwen, President of the Hong Kong Monetary Authority (HKMA), published a blog entitled "Re talking about the operation of the linked exchange rate system" to answer the recent concerns of investors. He pointed out that the outflow of funds from the Hong Kong dollar system does not necessarily mean the withdrawal of funds from Hong Kong. Regarding the issue of whether the decline in the overall balance of the banking system indicates the withdrawal of funds from Hong Kong, Yu Weiwen responded by pointing out that Hong Kong is an international financial center, and the inflow and outflow of funds have been common for many years. When the demand for inflows or outflows of Hong Kong dollars has not been fully digested by the Hong Kong banking system, the remaining portion needs to be taken over by the Monetary Authority through strong/weak exchange guarantees under the currency board system. With the US interest rate hike and global liquidity tightening, net outflow of funds from the Hong Kong dollar system is normal. He stated that funds flowing out of the Hong Kong dollar system into other currencies (such as the US dollar) may still remain in the Hong Kong financial system. Since last year, the total balance of the banking system has decreased from HKD 337.6 billion at the end of April last year to around HKD 49 billion at the end of April this year, the lowest level since November 2008. During the same period, the total amount of deposits in the Hong Kong banking system remained stable, with overall deposits increasing by about 1.4% from the end of April last year to the end of March this year, indicating that the outflow of funds from the Hong Kong dollar system does not necessarily mean the withdrawal of funds from Hong Kong. Yu Weiwen stated that taking into account the recent decline in the Hong Kong dollar market operation with the banking system, the Monetary Authority has observed that banks are generally able to manage their liquidity prudently, ensuring orderly and efficient flow of funds, and maintaining smooth daily operations and settlements between banks, effectively supporting Hong Kong's economic and social operations. (New News Agency)
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