---
title: "Fiscal Budget 2026 | After 42 years, using foreign exchange reserves to transfer HKD 150 billion to support North City. The Monetary Authority: Strongly maintains the stability of the financial system"
description: "The Financial Secretary Paul Chan announced in the \"2026 Budget\" that HKD 150 billion of foreign exchange reserves will be used to support North Metropolis and other infrastructure projects. This is t"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/276876863.md"
published_at: "2026-02-25T11:16:32.000Z"
---

# Fiscal Budget 2026 | After 42 years, using foreign exchange reserves to transfer HKD 150 billion to support North City. The Monetary Authority: Strongly maintains the stability of the financial system

> The Financial Secretary Paul Chan announced in the "2026 Budget" that HKD 150 billion of foreign exchange reserves will be used to support North Metropolis and other infrastructure projects. This is the first time in 42 years that the foreign exchange fund has been utilized, with an expected annual transfer of HKD 75 billion. The total assets of the foreign exchange fund exceed HKD 4.1 trillion, with a surplus of HKD 780 billion. The Hong Kong Monetary Authority stated that it is confident in maintaining the stability of the financial system. This transfer is a one-time measure and will not affect the stability of the foreign exchange fund

The Financial Secretary, Paul Chan, announced in the "2026 Budget" that the investment performance of the Exchange Fund reached a historical high last year, with annual investment income reaching HKD 330 billion. As of the end of last year, the total assets of the Exchange Fund exceeded HKD 4.1 trillion, a scale sufficient to maintain the monetary and financial stability of Hong Kong.

Paul Chan suggested that according to the "Exchange Fund Ordinance," without affecting the Exchange Fund's ability to maintain the stability and soundness of Hong Kong's monetary and financial system, HKD 150 billion should be transferred from the Exchange Fund to the Capital Works Reserve Fund, with HKD 75 billion transferred each year over the next two fiscal years to support the Northern Metropolis and other infrastructure projects.

## After the transfer, the Exchange Fund surplus remains at HKD 780 billion

The government has utilized the Exchange Fund reserves for the first time in 42 years, transferring a total of HKD 150 billion to the treasury over two years. The Hong Kong Monetary Authority responded that it has the capability and confidence to continue maintaining the stability and soundness of Hong Kong's monetary and financial system according to the "Exchange Fund Ordinance." Authorities stated that after the transfer to the government, the cumulative surplus of the Exchange Fund has still increased compared to the end of 2024, rising to over HKD 780 billion; moreover, the Exchange Fund holds over USD 420 billion in substantial foreign exchange reserves, which is 1.6 times the monetary base, providing a solid foundation for supporting the linked exchange rate system and financial system stability.

## Sources: The use of foreign exchange reserves is a one-time event

Government sources indicated that the transfer is currently a one-time event, considering that it is a small proportion relative to the total amount of the Exchange Fund, which is HKD 4.1 trillion, and it will not undermine the scale of funds used by the Exchange Fund to support the linked exchange rate, nor will it change the total balance of the banking system. Sources emphasized that the Exchange Fund continues to be sufficient to maintain monetary stability in Hong Kong.

Sources indicated that this transfer of funds is invoked under Article 8 of the "Exchange Fund Ordinance," which grants the Financial Secretary the authority to implement it, allowing for the transfer of funds to government-controlled funds as long as the Exchange Fund's assets have not fulfilled their total responsibilities maintaining below 105%; the specific assets to be transferred under the Exchange Fund project will be handled by the Exchange Fund Advisory Committee.

Data shows that the last time the government transferred from the Exchange Fund was in 1984, with an amount of HKD 250 million

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.