On 6 November 2008, the HKMA announced two refinements to the fifth of the five measures introduced on 30 September for providing liquidity assistance to licensed banks in Hong Kong, namely, the lending of term money of up to one month to individual licensed banks against collateral of credit quality acceptable to the HKMA. The two refinements are aimed at further easing term funding pressures and providing assurance to the market about the availability of liquidity in anticipation of the banks' greater demand for funding towards the year-end. The refinements took immediate effect and will remain in force until the end of March 2009 and comprise the following:

  1. extension of the maximum tenor of collateralised term lending from one month to three months; and
  1. while the interest rate for such lending continues to be determined with reference to market interest rates, the HKMA will take into account the fact that such lending is secured by collateral in determining the applicable interest rate. The HKMA considers that there is scope for setting a lower lending rate for the term lending facility compared with the relevant interbank interest rate in view of the secured nature of such lending and the current distortions and frictions in the term interbank market.