Hong Kong ATMs might run out of cash as panic grips the public
Regional banks have proven to be remarkably resilient in the face of ongoing mass protests
As the violence in Hong Kong reaches previously unseen levels with each passing week, the local upheaval is now spilling over into the financial world after rumours about government-enforced forex controls emerged over the weekend.
On Friday, the Hong Kong regional government saw fit to effectively allow for the introduction of martial law by banning the wearing of masks at public assemblies – a colonial-era law that gives authorities the green light to crack down on protesters at will. While the local economy takes a nose-dive, with retail sales suffering their biggest drop on record, regional banks have proven to be remarkably resilient in the face of ongoing mass protests and the ever-rising threat of militaristic Chinese retaliation.
As is common knowledge, this could deal a death blow to Hong Kong’s status as the financial capital of the Pacific Rim, crushing the entire local banking system in a heart-beat. Put simply, despite the interstellar alignment of confluent factors for a bank run, the locals continued to behave as if they hadn’t a care in the world.
However, this all changed after a junior JPMorgan banker was beaten in broad daylight by a protesting mob, as reported by the HK publication. The spillage into the financial world seems all but inevitable at this point. In fact, the Honk Kong Monetary Authority was forced to issue a statement warning against a “malicious attempt to cause panic among the public”, after rumours about government capital control emergency powers circulated the internet.
While the de facto central bank stressed that the banking system remained robust and well-positioned to endure market volatility, some stats posted later that day gave a somewhat disconcerting outlook. The monetary authority said that not only were more than 10% of 3,300 ATM’s not functioning, but that banks were in talks with logistics and operation companies to refill cash machines as 5% of them had run out of money, adding that banknote delivery was hit due to closure of shopping malls and MTR stations.
The question is: will this be enough to prevent a bank run on the remaining cash machines? The answer will largely depend on what happens in the next 24-48 hours in Hong Kong – although the signs aren’t great.
Earlier on Saturday (5th Oct.), Hong Kong’s leader, chief executive Carrie Lam Cheng Yuet-ngor, appealed to the public to condemn violence and distance themselves from rioters, saying that street chaos after the ban on face masks was the reason such a controversial restriction was imposed in the first place.
In a five-minute video released Saturday afternoon, a stern-faced Lam, flanked by fourteen of her top officials, slammed those responsible for the “outrageous” rampage. This came after rioting mobs set a train on fire, assaulted railway staff and trashed MTR stations on Friday night, grinding the regions primary mode of transport to a halt. Commenting on the incident, Lam said:
Horribly violent incidents took place in various districts in Hong Kong last night. The extreme acts of the masked rioters were shocking and the level of vandalism was unprecedented. The extreme acts of the rioters brought dark hours to Hong Kong last night and half-paralysed society today. Everyone is worried, anxious and even in fear.
All the while, Hong Kong is on the brink of total socio-economic paralysis as dozens of shopping malls, retail outlets, grocery stores and banks closed their doors for fear of continued riots and violence.
Lam referred to the incident of a plain-clothes officer who was beaten and burned with petrol bombs by a mob in Yuen Long, saying he “had no choice but to shoot in self-defence”, injuring a teenager who was later taken into custody on charges of taking part in the police assault. The violence provided a pretext to impose the anti-mask law, she said, defending the government’s decision to introduce it by invoking the colonial-era Emergency Regulations Ordinance for the first time in over half a century.
“The government will curb violence with utmost determination,” she said. “Let’s condemn violence together and resolutely disassociate with rioters.”
If the HK leader hoped this address would resonate with the masses, her hopes and dreams were undeniably crushed, as while the video message was broadcast on television, hundreds of Hongkongers – many of them masked – started to march from Causeway Bay to Central to protest against the ban.
One of the protestors, a 22-year old Louie, said it wasn’t fair of Lam to ask the public to condemn the masked rioters.
She is making us a target even though we are the ones fighting for our freedom as Hongkongers. Masks hold an important symbol in Hong Kong. We used masks during the Sars [severe acute respiratory syndrome] outbreak of 2003 and to protect ourselves against tear gas. It’s a symbol of resistance and you cannot take that away from us.
Earlier on Saturday, a similar appeal from Security Secretary John Lee Ka-chiu aimed to sway the public from supporting rioters, as he dismissed any accusations that the government had added fuel to the fire with the mask ban.
The introduction of the anti-mask regulation is to make sure that those who commit crimes and commit violence will have to face justice, so that they cannot hide behind their masks to escape their responsibilities.
What is adding oil to violence is people’s support for these acts or people’s acquiescence in finding reasons for this violence to continue. So, what is important is that everybody comes out to say, ‘No, society will not accept violence.
Lee also noted that nobody has been arrested under the new law which came into effect on Saturday.
Justice Secretary Teresa Cheng Yeuk-wah said the government wouldn’t rule out tougher measures, including the use of emergency powers in the protests continued to spiral out of control.
Ultimately, observers and Honkkongers know that the decision is up to China: will the regime allow increasing momentum and international support to go along unchallenged, or will the People’s Liberation Army finally make a grand entry and in doing so mark the official turning point of financial pearl of the orient?
To gauge what might happen next, it might be a good idea to keep a watchful eye on bitcoin as LocalBitcoins – a popular platform for direct peer-to-peer trading – posted its highest trading volume in history in Hong Kong last week.
And indeed, if the local ATM machines happen to “run out” of money, a Hong Kong demand for bitcoin and other altcoins – with gold being another obvious choice – would send shockwaves across the financial world and beyond.