Recently, the Hong Kong Monetary Authority (HKMA) released an Annual Report 2022 and Sustainability Report 2022. In the report, the performance of Hong Kong in the previous year and plans for the upcoming year have been mentioned.
According to the report published by HKMA, Hong Kong’s economy has shown signs of growth in 2023 however, the external challenges remain very vulnerable that might affect the resurgence in upcoming times. In the “Priorities for 2023 and Beyond” section of the Annual report there’s mention of recent collapses of banks in the United States. Additionally, it said that the failures of the three biggest crypto-friendly banks, the Silicon Valley Bank, the Silvergate Bank, and the Signature Bank in the United States sent shockwaves throughout the world. This incident forced regulatory bodies to implement tight money policies that will likely slow growth and even recession in the upcoming months.
The HKMA looks at the financial technology (Fintech) sector very optimistically and plans to explore new benefits in the longer run. According to the reports, for future-proofing the banking sector Hong Kong needs to adopt new technologies. Under its “All banks go fintech” initiative of its “Fintech
2025” strategy, the HKMA completed the Tech Baseline Assessment in 2022. In the Tech Baseline Assessment, the Hong Kong Monetary Authority assessed the stock of banks situated in Hong Kong and if there are any fintech businesses and technology areas where the support of HKMA is needed.
Hong Kong has been very vocal in advocating the adoption of fintech innovations in the last few months. Also, after the ban by mainland China on cryptocurrency exchanges, Hong Kong has been the favorite destination to perform its business. According to reports, around 80 companies are trying to establish their businesses in the city.
The outcomes of the assessment conducted last year suggested that banks were prepared enough to provide a healthy amount of financial and talent support to the fintech industry for the next three years. Additionally, the HKMA aims to make the region the fintech in the Asian continent by 2025. It will mainly focus on facilitating banks’ digitization and adoption of the Regulatory Authority (Regtech).
HKMA also unveiled its plans for cryptocurrencies and stablecoins. It said that it would continue to develop an agile and risk-based regulatory framework for stablecoins to address the financial and monetary risks they may reflect. However, the report also clarified that financial innovations and market development will remain the focal point of the HKMA.
Hong Kong shows a calculative approach in its Annual Report 2022 on digital asset management. It can be concluded from the report that the HKMA is keen to develop the city as a global fintech hub. Additionally, it has already allocated a separate fund worth HK$50 million (US$6.37 million) to provide the necessary infrastructure to facilitate these investments.