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MAS enhancing banking system's liquidity during COVID-19 pandemic

MAS enhancing banking system's liquidity during COVID-19 pandemic

The Monetary Authority of Singapore (MAS) building in Singapore. (Photo: AFP/Roslan Rahman)

SINGAPORE: The Monetary Authority of Singapore (MAS) announced new measures on Thursday (Sep 3) to enhance the banking system's access to Singapore dollar and US dollar funding to bolster the sector's resilience during the COVID-19 pandemic.

These include the establishment of a new term facility to provide banks and finance companies an additional channel to borrow SGD funds at longer tenors and with more forms of collateral.

The MAS SGD Term Facility, to be launched in the week of Sep 28, will offer SGD funds in one- and three-month tenors.

Pricing will be set above prevailing market rates, in line with the facility’s objective to serve as a liquidity backstop, the central bank said.

Domestic systemically important banks – designated as such because they have a significant impact on the stability of the country's financial system – that are incorporated in Singapore can pledge eligible residential property loans as collateral at the MAS SGD Term Facility.

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MAS will also expand the range of collateral that banks in Singapore can use to access USD liquidity from the MAS USD Facility. Currently, banks can borrow USD by pledging eligible SGD-denominated collateral.

With the change, banks will be able to pledge a wider pool of cash and marketable securities from Sep 28, in line with what is accepted at the SGD Term Facility, MAS added.

The central bank's deputy managing director Jacqueline Loh said that since the start of the COVID-19 crisis, MAS has introduced three new liquidity facilities and also significantly expanded the types of collateral accepted at these facilities.

"Taken together, these enhancements to MAS' suite of liquidity facilities will fortify the resilience of the banking sector and financial markets in Singapore, and enable our banks to continue to support the needs of businesses and individuals here, and in the region through the crisis," she said. 

Source: Reuters/cna/kv

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