The second phase of Basel III capital and liquidity requirements will be implemented to boost the banking system's ability to handle financial shocks, the Financial Services & the Treasury Bureau said today.
The Banking (Capital) (Amendment) Rules 2014 and the Banking (Liquidity) Rules were gazetted today to implement the requirements scheduled to take effect on January 1.
The requirements include a series of capital buffers to incentivise banks to build up and hold capital that they can draw upon when necessary to absorb shocks arising from any financial and economic stress; and a Liquidity Coverage Ratio to ensure banks maintain a sufficient pool of high quality liquid assets to withstand short-term liquidity risks.
The subsidiary legislation will be tabled before the Legislative Council at its sitting next Wednesday for negative vetting.