Hong Kong cuts banks' capital buffer as protests persist

This releases an additional $25.5b into the economy.

Reuters reports that the Hong Kong Monetary Authority (HKMA) has cut the amount of cash that banks need to hold as reserves, unleashing an additional $25.5b-$38.25b (HK$200-300b) to prop up an economy bearing the weight of protests and trade tensions.

Also read: Hong Kong banks' 2019 loan growth cut to 2%

The central bank reduced the Countercyclical Capital Buffer (CCyB) ratio of banks to 2.0% from 2.5%, with immediate effect, particularly aimed at boosting credit to the struggling small and medium enterprises. This marks the first cut in the CCyB ratio since it was introduced in 2015.

“Lowering the countercyclical capital buffer at this juncture will allow banks to be more supportive to the domestic economy and help mitigate the economic cycle,” HKMA chief executive Eddie Yue said in the statement.

The economy shrank 0.4% in Q2, inflaming concerns of a technical recession as protests against what has been perceived as China's tightening grip in Hong Kong enter their fourth month.

Here's more from Reuters:

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