HONG KONG (Reuters) - The Hong Kong Association of Banks has initiated a review of the fixing mechanism and governance structure of the Hibor process as central banks worldwide scrutinize the troubled Libor procedure, a spokesperson for the city’s de facto central bank said on Thursday.
The Hong Kong Monetary Authority said it supported the review and would monitor the process and outcome.
“HKD Hibor fixing has been in place for over 20 years. We have not observed any anomaly in its operation,” the spokesperson said.
Central bankers and regulators will hold talks in September on whether the London interbank offered rate (Libor) used globally can be reformed or whether it is so damaged that the benchmark of borrowing costs should be scrapped.
Hibor is similar to its London equivalent Libor, in that it represents an average of the rates submitted by banks at which they are prepared to lend to each other. The Hong Kong Association of Banks compiles Hibor daily from the submissions of 20 banks, stripping out the three highest and lowest bids.
The rate is primarily used as a reference for pricing mortgages and other financial products, since Hong Kong’s deposit-rich banks rarely need to raise funds through short-term interbank lending.
Editing by Chris Lewis