Approach to Implementing the Countercyclical Capital Buffer (CCyB)
3.6. Public communication regarding the Hong Kong jurisdictional CCyB rate
3.6.1. Publication of information relating to the Hong Kong jurisdictional CCyB rate. The MA will post on its website the following information in respect of the Hong Kong jurisdictional CCyB rate:
The latest extant and pre-announced CCyB rates
Historical (quarterly) time series of:
- The Initial Reference Calculator’s CCyB rate guide (subject to a 2.5% cap)
Supervisory Policy Manual
Approach to Implementing the Countercyclical Capital Buffer (CCyB)
Draft for consultation
14.8.14
- The Basel Common Reference Guide (with and without cap)
- The Composite CCyB Guide based on the “primary gap indicators” (with and without cap)
- The Indicative CCyB Ceiling based on the “primary stress indicators”
- The “primary gap indicators” and the “primary stress indicators”
- The current list of Comprehensive Reference Indicators
The announcements referred to in paras. 3.6.2 and 3.6.3 below
3.6.2. Announcement of CCyB decision in line with the Initial Reference Calculator. If a decision by the MA to activate, increase, decrease or release the Hong Kong jurisdictional CCyB rate is consistent with the Initial Reference Calculator, the MA will include in the announcement of the Hong Kong Jurisdictional CCyB rate the following information:
The announced CCyB rate.
In the case of any decision to activate or increase the CCyB rate, the period of time for the decision to take effect, which would normally be 12 months in cases where the buffer decision follows the Initial Reference Calculator;
In the case of any decision to reduce the CCyB rate, any applicable Indicative CCyB Ceiling and the minimum period for which this is expected to remain effective (the “Indicative Minimum Ceiling Duration”
in Table 1).
A summary description of the analysis of the primary gap indicators and the primary stress indicators, their respective current levels and resulting Composite CCyB Guide and Indicative CCyB Ceiling, and how
Supervisory Policy Manual
Approach to Implementing the Countercyclical Capital Buffer (CCyB)
Draft for consultation
14.8.14
the Initial Reference Calculator leads to the CCyB decision.
If the MA considers it useful or appropriate, a brief explanation of why the Comprehensive Reference Indicators (discussed in Sub-section 3.3 above) or other available information considered by the MA do not, in the view of the MA, warrant any divergence from the Initial Reference Calculator.
3.6.3. Announcement of CCyB decisions departing from the Initial Reference Calculator. If the MA’s decision regarding the CCyB differs from that signalled by the Initial Reference Calculator, the MA will include in the announcement of the Hong Kong jurisdictional CCyB rate the following information:
The announced CCyB rate.
In the case of any decision to activate or increase the level of the CCyB, the period of time for the decision to take effect, which may be a period between 6 and 12 months. It would normally be 12 months unless the pace of credit growth is such as to prompt serious concerns for financial stability over the shorter-term, in which case a pre-announcement period of less than 12 months (but not less than 6 months) may be set.
In the case of any decision to reduce the CCyB rate below the level indicated by the Initial Reference Calculator, the minimum period, if any, during which it would be the HMKA’s general intention not to raise the CCyB rate above the announced level.
A description of any additional macroprudential policy measures that are being adopted jointly with the Hong Kong jurisdictional CCyB decision currently being announced.
The Initial Reference Calculator’s CCyB rate guide and a summary description of the analysis of the primary gap indicators and the primary stress
Supervisory Policy Manual
Approach to Implementing the Countercyclical Capital Buffer (CCyB)
Draft for consultation
14.8.14
indicators, their respective current levels and the resulting Composite CCyB Guide and Indicative CCyB Ceiling.
An outline of the factors (including but not limited to the analysis of the Comprehensive Reference Indicators) considered by the MA in reaching the MA’s policy decision(s) and the rationale for that decision by reference to the MA’s views on the appropriate macro-prudential policy stance in the circumstances.
In the case of any decision to raise the CCyB rate above 2.5%, an analysis demonstrating that the conditions specified in BCR §[…] are fulfilled (see second bullet under para. 3.5.4 above).
3.6.4. The Half-Yearly Monetary and Financial Stability Report (MFSR). The Half-Yearly MFSR will contain a section discussing decisions relating to the Hong Kong CCyB in the broader context of the MA’s analysis of financial stability issues and corresponding policies. The Half-Yearly MFSR will thus provide a background (both backward- and forward-looking) that can help the industry form expectations in respect of Hong Kong jurisdictional CCyB decisions and macroprudential policies more broadly.
3.6.5. Provision of information on the Hong Kong jurisdictional CCyB rate to other jurisdictions and to the BIS. As and when the MA makes any decision to activate, increase, decrease or release the Hong Kong jurisdictional CCyB rate, the MA will promptly inform the BIS and the home supervisory authorities of AIs incorporated outside Hong Kong of the MA’s decision so they can take the necessary steps to publish the Hong Kong jurisdictional CCyB rate in the case of the BIS or to ensure that their financial institutions take the Hong Kong jurisdictional CCyB rate set by the MA into account in calculating their firm-specific CCyB rates.
In addition to communicating its decisions on the Hong Kong jurisdictional CCyB rate to overseas authorities, the
Supervisory Policy Manual
Approach to Implementing the Countercyclical Capital Buffer (CCyB)
Draft for consultation
14.8.14
MA will communicate to such authorities the information announced by the MA in accordance with Sub-section 3.6 above, with a view to seeking such authorities’ recognition of the Hong Kong jurisdictional CCyB rate and its timing in respect of the banks they supervise in line with the Basel Committee standard of jurisdictional reciprocity (see Sub-section 4.1 below).