| Abstract | Following extensive consultation with the banking industry, the Hong Kong Monetary Authority introduced on 1 August 1994 the new regime for the supervision of authorised institutions' liquidity. The objectives of the new approach are to ensure, as far as possible, that authorised institutions can meet their obligations when they fall due under normal circumstances; and maintain an adequate stock of high quality liquid assets to provide them with a breathing space in the event of a liquidity crisis. To achieve these objectives, the Hong Kong Monetary Authority will assess a variety of quantitative and qualitative factors such as the liquidity ratio, maturity mismatch, stability of the deposit base and loan to deposit ratio. |
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