National security legislation not to bring any changes to fundamentals of HK's financial system: monetary authority head

HONG KONG - Chief Executive of the Hong Kong Monetary Authority (HKMA) Eddie Yue has said the national security legislation for the Hong Kong Special Administrative Region (HKSAR) will not bring any changes to the fundamentals of Hong Kong's monetary and financial system.

The free flow of capital and free convertibility of the Hong Kong dollar will continue to be safeguarded by Article 112 of the Basic Law, Yue said in an online article.

Yue cited a stable Linked Exchange Rate System (LERS) and strong capital positions in the banking system.

"The LERS will remain the bedrock of our financial system, which is underpinned by strong foreign reserves position of over 440 billion U.S. dollars, more than two times Hong Kong's monetary base."

Despite recent stock market volatility, the Hong Kong dollar exchange rate has remained stable, interest rates have stayed low, and financial markets have also been operating in a smooth and orderly manner, Yue said.

"There has not been noticeable sign of fund outflow from either the Hong Kong dollar or banking system."

The HKMA is alert to rumors that seek to trigger market volatility, undermine market confidence and threaten financial stability and will act swiftly to dispel unfounded rumors, Yue said.

Hong Kong's resilience as an international financial center is underpinned by robust financial infrastructure, sound regulatory system, extensive expertise as well as strong buffers built up over the past years, Yue said.

Hong Kong currently needs a safe and stable environment for businesses to recover and flourish and for investors' confidence to improve in the long term, Yue said.

Indeed, one should look beyond short term market volatility, and always bear in mind the strong fundamentals and strengths that make Hong Kong what it is today, Yue said.