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SINGAPORE: The Monetary Authority of Singapore (MAS) announced new measures on Thursday (September 3) to improve the banking system’s access to financing in Singapore dollars and US dollars to strengthen the resilience of the sector during the COVID-19 pandemic.
These include the establishment of a new term mechanism to provide banks and finance companies with an additional channel to borrow SGD funds over longer terms and with more forms of collateral.
The MAS SGD Term Facility, which will launch the week of September 28, will offer SGD funds in terms of one and three months.
Prices will be set above prevailing market rates, in line with the facility’s goal of serving as a liquidity backup, the central bank said.
Systemically important national 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 in the MAS SGD Term Credit Facility.
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MAS will also expand the range of collateral that Singapore banks can use to access US dollar liquidity from the US dollar MAS line. Currently, banks can borrow US dollars by committing eligible SGD-denominated guarantees.
With the change, banks will be able to pledge a larger reserve of cash and marketable securities as of September 28, in line with what is accepted in the SGD Term Facility, MAS added.
Central Bank Deputy Managing Director Jacqueline Loh said that since the beginning of the COVID-19 crisis, MAS has introduced three new lines of liquidity and has also significantly expanded the types of collateral accepted at these facilities.
“Together, these enhancements to MAS’s pool of liquidity facilities will strengthen the resilience of the banking sector and financial markets in Singapore, and allow our banks to continue to support the needs of businesses and individuals here and in the region during the crisis., ” she said.
