The central bank and regulator has announced measures to enhance the banking system’s access to Singapore dollar (SGD) and U.S. dollar (USD) funding.
The Monetary Authority of Singapore is introducing a new MAS SGD Term Facility to provide banks and finance companies an additional channel to borrow SGD funds at longer tenors and with more forms of collateral. To launch on September 28, the new facility, which offers funds for 1-month and 3-month tenors, complements the existing overnightMAS Standing Facility in serving as a liquidity backstop.
Domestic systemically important banks (D-SIBs) that are incorporated in Singapore will be able to pledge eligible residential property loans as collateral at the MAS SGD Term Facility. MAS will also raise the asset encumbrance limit of 4 percent, imposed on locally incorporated banks, to 10 percent of total assets.
At the same time, MAS is expanding the collateral accepted at the MAS USD Facility, which banks in Singapore can use to access USD liquidity. Singapore banks can currently borrow USD by pledging eligible SGD-denominated collateral, but will be able to use a wider pool of cash and marketable securities from September 28.
Banking Sector Resilience
MAS previously introduced the MAS USD Facility and MAS SGD Facility for ESG Loans to strengthen the resilience of the banking sector and financial markets in Singapore amid the Covid-19 pandemic.
«The new measures will strengthen banking sector resilience, promote more stable SGD and USD funding conditions, and support credit intermediation amid continued economic headwinds from the COVID-19 pandemic,» MAS said in a statement on Thursday.
UOB group chief risk officer Chan Kok Seong welcomed the new measures, saying they would «facilitate the continued smooth access to funding as financial institutions help consumers and companies to overcome their difficulties and support Singapore’s road to economic recovery.»
