CONFIDENTIAL
8.
from
Second is to
seek late liquidity assistance
the Exchange Fund. But this is not a popular alternative for three reasons:
concern
(a) late liquidity assistance from the Fund
is not always forthcoming because of the part of the Exchange Fund that its provision under certain monetary
conditions
misinterpreted to be
may be
a more permanent injection
injection of liquidity
into the interbank market for a monetary
purpose;
(b) the terms for the provision of late liquidity assistance by the Exchange Fund
are not standardized because of the need
on the part of the Exchange Fund in such
operations to take account of
of prevailing monetary conditions and of credit risks;
and
(c) some
licensed banks have the reservation that the seeking of such late liquidity assistance from the Exchange Fund may,
in the event that it becomes known to
other banks or to members of the public, be misinterpreted as the banks concerned experiencing fairly serious difficulties,
thereby affecting confidence in those
banks.
CONFIDENTIAL.
P. 6
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