Singapore, 7 June 2020… The Monetary Authority of Singapore (MAS) said today that media reports suggesting that there were large flows of deposits from Hong Kong to Singapore were incorrect. While foreign currency deposits in Singapore have grown substantially since the beginning of this year, the order of magnitude is much less than cited in some media reports. The growth in foreign currency deposits has come from diverse sources and for varied reasons.
2 Total foreign currency non-bank deposits in Singapore’s banking system stood at S$781 billion at the end of April this year, 20% higher than a year ago. Media reports that said foreign currency deposits at Singapore’s banks jumped almost four-fold on a year-on-year basis in April 2020 appear to have focused on such deposits in just the Domestic Banking Units (DBU) and ignored the Asian Currency Units (ACU). It is not meaningful to look at only the foreign currency deposits in the DBUs as they make up less than 5% of the total of such deposits across both the DBUs and ACUs. The DBUs and ACUs are ledgers of the same bank held separate for regulatory purposes; MAS announced in 2015 that the two ledgers would be merged as there was no longer a meaningful purpose for the separation. Legislative amendments to do away with the DBU-ACU divide were passed in Parliament in January this year, and will come into operation at a date to be announced.
3 The strong growth in foreign currency deposits in Singapore this year has come from a variety of sources – domestic, regional, and beyond the region. No single region or country source dominates. There are some well-known global drivers of this deposit growth amid the current COVID-19 related economic slump, including central bank actions that increase liquidity in the financial system, banks and corporate treasuries raising their liquidity profiles, and a higher level of precautionary savings by households. Other financial centres have also seen significant deposit growth.