HONG KONG, Sept 30: Hong Kong’s de facto central bank on Tuesday announced a package of temporary measures aimed at increasing liquidity into the city’s nervous banking system, as financial turmoil dried up credit.

The Hong Kong Monetary Authority unveiled five moves to try to increase assistance to the city’s banks, which are reluctant to lend to each other because of the recent turmoil in the credit markets.

“Continuing stress in the financial systems of developed markets has caused some concern among licenced banks in Hong Kong over the credit worthiness of each other,” an HKMA spokesman said.

“This concern, together with a wish to preserve liquidity to meet their own contingent needs, has led to a general shortage of interbank liquidity and difficulties on the part of individual licensed banks in obtaining funding in the interbank market.” “The five measures will provide further tools for the HKMA to help ensure that Hong Kong’s banking system continues to function effectively,” the spokesman added in a statement.

The five technical measures include lending term money to banks for up to one month against credit-worthy capital, extending repayment periods for some borrowing, removing some penalties and lending against US dollar assets.—AFP