Monetary Authority of Singapore Annual Report 2011/2012
Our Work

LIQUIDITY MANAGEMENT

Enhancing the Standing Facility

The MAS Standing Facility is our main channel for fine-tuning banking system liquidity and managing interest rate volatility. It also provides banks with the assurance that liquidity needs in the banking system can be met in times of unusual volatility.

Given the large number of international banks operating in Singapore, MAS has established cross-border collateral arrangements with foreign central banks over the years. These allow banks in Singapore to use high quality foreign government bonds and foreign currencies as collateral in the Standing Facility. The foreign central banks include the Bank of England, Banque de France, Bundesbank and De Nederlandsche Bank.

In 2011, MAS added the Federal Reserve Bank of New York and Bank Negara Malaysia (BNM) to this list. These new arrangements will allow eligible financial institutions to pledge US Treasury bills and notes, Malaysian Ringgit (MYR) cash and Ringgit-denominated sovereign and central bank securities as collateral at the MAS Standing Facility. The arrangement with BNM also allows banks in Malaysia to obtain MYR liquidity from BNM’s liquidity facility using Singapore Government Securities (SGS), Treasury Bills, MAS Bills and Singapore dollar cash.