The HKMA will be permitted to provide direct lending to Hong Kong banks, while making it easier for banks to use the authority's overnight funding facility.
Mr. Chan acknowledged Friday, however, that the HKMA looked into possible abuse of the new system by those looking for a back-door means of procuring yuan.
His statement comes as a surprise to all, as throughout his 16 years as chief executive of the Hong Kong Monetary Authority (HKMA), he defended and strongly upheld the peg between the two currencies.