• Fri
  • Oct 24, 2014
  • Updated: 4:05am
BusinessEconomy
US SHUTDOWN

Hong Kong capable of coping if US fails to raise debt ceiling, Tsang says

PUBLISHED : Tuesday, 15 October, 2013, 12:00am
UPDATED : Tuesday, 15 October, 2013, 8:08am

Hong Kong watchdogs would be able to cope with "very bad" scenarios involving a sudden shock to the city's economy if the debt-ceiling crisis in the United States is not resolved, Financial Secretary John Tsang Chun-wah said yesterday.

The US is in the third week of a federal government shutdown, with little progress on the political front and no clear pathway to reach a compromise and solve the debt-ceiling problem.

If the US debt ceiling is not raised by Thursday, the US Treasury will run out of money and could begin defaulting on its obligations.

Market watchers are worried that the shutdown will continue and that the US Treasury will have exhausted all extraordinary measures to forestall a default, which would cause risks to the world economy and financial markets.

Tsang, who returned from annual meetings of the International Monetary Fund and the World Bank in Washington yesterday, urged the US government to take quick action.

"The two parties [Democratic and Republican] should reach an agreement as soon as possible and give the public a clear plan on how to cut [domestic] deficits," he said. "The debt-ceiling crisis is inevitably affecting Hong Kong."

He said local regulators had conducted a stress test based on a worst-case scenario for the US debt-ceiling problem.

"The stress test shows local watchdogs are able to cope with very bad situations," Tsang said, though he did not provide specific details.

The most recent showdown over the debt ceiling, in 2011, turned out to be a particularly nasty affair, culminating in Standard & Poor's downgrading America's sovereign credit rating.

Apart from the likely impact from the debt-ceiling showdown, Tsang also expressed concern about the city's housing market. Hong Kong should maintain its curbs on home prices to prevent the housing market from becoming more volatile, he said.

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This article is now closed to comments

oasis
We can still drink sbux coffee and watch (pirated bitorrent) French movies - we're still middle class aren't we?
What we can't cope with is this moron's statements. The world would be a better place if he stopped talking.
xiaoblueleaf
For how long, you idiot?
 
 
 
 
 

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