Holiday scheme benefits $600b loans, says HKMA

Business | Winnie Lee 29 Sep 2020

The Hong Kong Monetary Authority said troubled loans would get a breather thanks to its Pre-approved Principal Payment Holiday Scheme, covering HK$600 billion worth of loans.

HKMA deputy chief executive Arthur Yuen said the number of troubled loans had risen amid the Covid-19 pandemic and geopolitical tensions, but the growth in the second quarter was slower than that of the first quarter.

He said the financial situation of the local banking sector remains robust and urged banks to convert London Inter-bank Offered Rate-linked assets as soon as possible.

Meanwhile, in the United States, the Federal Reserve has been exploring central bank digital currencies to prepare for extreme stress like the Covid-19 pandemic.

"Once we get through the current pandemic, making necessary investments to ensure that the US payments system remains resilient in the face of extreme stress events will need to remain a priority," Cleveland Federal Reserve Bank President Loretta Mester said.

The Financial Times meanwhile reported that US commercial properties hit by the economic effects of coronavirus could have lost as much as one-quarter of their value or more.

Evidence emerging in the commercial mortgage-backed securities market from recent appraisals also raises questions over the value of the collateral backing commercial mortgages throughout the financial system. Properties that have gotten into trouble are being written down by 27 percent on average, data from Wells Fargo shows.



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