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HKMA Urges Banks To Perform Stress Test
The Hong Kong Monetary Authority has ordered banks to conduct stress tests to reveal the effect of deposit outflows on their liquidity positions.
The Hong Kong Monetary Authority (HKMA) has ordered banks to conduct stress tests to reveal the effect of deposit outflows on their liquidity positions, The Wall Street Journal reports. The HKMA has set assumptions regarding the magnitude and pace of deposit outflows for the purpose of stress testing.
The banks must undergo the stress test assuming an outflow of about $88.5 billion of customer deposits within 6-12 months. The regulator is tightening the monitoring of Hong Kong banks due to concerns about a credit-fueled property bubble following rapid growth of credit since 2010.
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