Banking will become more expensive for consumers as early as next July, when the final phase of interest rate deregulation ends. That is the message from Simon Topping, executive director of banking policy at the Hong Kong Monetary Authority (HKMA).
In an interview with Sunday Money, Mr Topping said poorer sections of society would suffer the most once interest rates were fully liberalised.
'Those people with small balances are not going to necessarily do that well out of [deregulated interest rates],' said Mr Topping.
'Banks, in their effort to apportion costs more precisely, may start charging those who only have a small balance extra fees for maintaining an account.'
The first phase of interest rate deregulation, which started in July, involved the removal of the interest rate cap on time deposits with a maturity of less than seven days, completely deregulating time deposits.
Following this, some banks introduced new overnight deposit accounts, paying interest above the savings account rate but the response was, in general, muted. The final phase will see the removal of both the interest rate cap on saving accounts and the prohibition of interest on current accounts.