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EMERGING FROM THE
GLOBAL RECESSION
MONETARY POLICY
LIQUIDITY
MANAGEMENT
ENSURING SAFETY
AND SOUNDNESS
OF FINANCIAL INSTITUTIONS AND
FINANCIAL SYSTEM
SINGAPORE AS AN
INTERNATIONAL
FINANCIAL CENTRE
ENHANCING
OPERATIONAL
CAPABILITIES
AND RESILIENCE
CURRENCY AND
PAYMENT SYSTEM

LIQUIDITY MANAGEMENT

Streamlining the Standing Facility

Since its inception in June 2006, the MAS Standing Facility has developed into MAS’ main liquidity facility for financial institutions, allowing MAS to successfully fulfill its dual role of fine-tuning the liquidity of the banking system and managing interest rate volatility. The Standing Facility helps to improve the day-to-day liquidity management of banks in Singapore by providing a channel for them to borrow from, or place excess funds with, MAS directly. The Standing Facility also boosts market confidence by giving banks the assurance that liquidity needs in the banking system will be met in times of unusual volatility.

Given its importance, the Standing Facility is reviewed regularly to ensure its optimal role in the proper functioning of the banking system. In 2008, MAS expanded the eligibility criteria to allow all MEPS+ participants to access the Standing Facility, in line with global central banks’ best practice for discount windows. In 2009, MAS announced an expansion of eligible collateral for accessing the Standing Facility.

In February 2010, the terms and conditions of the Standing Facility were refined further. The minimum size of a transaction was reduced from S$20 million to S$10 million to allow for participation from more banks. This signaled MAS’ commitment to ensuring financial stability. The minimum transaction limit could be lowered further on a case-by-case basis, subject to MAS’ approval. This has given the Standing Facility additional flexibility.