The Chinese Central Government has announced that 14 measures will be undertaken in seven areas to support Hong Kong's financial stability and economic development.

The measures include agreeing to the signing of a currency swap agreement between the People's Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA).

The establishment of a currency swap arrangement means short-term liquidity support can be provided to the mainland operations of Hong Kong banks and the Hong Kong operations of mainland banks in case of need.

It is intended this will bolster confidence in Hong Kong's financial stability, and will also help to promote financial stability in the region and the development of renminbi-denominated trade transactions between Hong Kong and the mainland. The currency swap agreement has a term of three years, which can be extended upon agreement by both parties. It can provide liquidity support up to RMB200bn/ HK$227bn.

John Tsang, the Financial Secretary, said: "The signing of a currency swap agreement by the PBoC and the HKMA is a policy measure of the Central Government to further support Hong Kong's economic development, and it will help to maintain Hong Kong's status as an international financial centre."

Joseph Yam, chief executive of the HKMA, added: "The establishment of a currency swap arrangement will help to address contingent needs and maintain financial stability. It will also contribute to the development of a mutually assisting, complementary and interactive relationship between the financial systems of the Mainland and Hong Kong."