Featured Product

    MAS Announces Measures to Enhance Bank Liquidity Amid Pandemic

    September 03, 2020

    MAS announced measures to enhance the access of banking system to Singapore dollar (SGD) and US dollar (USD) funding. These measures include establishment of the MAS SGD Term Facility, acceptance of residential property loans as collateral at the MAS SGD Term Facility, and expansion of collateral accepted at the MAS USD Facility. The new measures will strengthen banking sector resilience and support credit intermediation amid continued economic headwinds from the COVID-19 pandemic.

    Since the beginning of the COVID-19 crisis, MAS has introduced three new liquidity facilities: the MAS USD Facility, the MAS SGD Facility for ESG Loans, and now the MAS SGD Term Facility. MAS has also significantly expanded the types of collateral accepted at these facilities. The following are the key highlights of the recently announced measures:

    • A new MAS SGD Term Facility will be introduced to provide banks and finance companies an additional channel to borrow SGD funds at longer tenors and with more forms of collateral. The new Facility will offer SGD funds in the one-month and three-month tenors, complementing the existing overnight MAS Standing Facility. A wider range of collateral comprising cash and marketable securities in SGD and major currencies will be accepted. Pricing will be set above prevailing market rates, in line with the Facility’s objective to serve as a liquidity backstop. The Facility will be launched in the week of September 28, 2020.
    • 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. The acceptance of residential property loans as collateral is only available to D-SIBs and is in line with the practices of major central banks. MAS will also raise the asset encumbrance limit imposed on locally incorporated banks under the Banking Act (Cap. 19). The asset encumbrance limit will be increased to 10% of a locally incorporated bank’s total assets, up from the current limit of 4%. This increase will give the locally incorporated banks greater leeway to pledge residential property loans as collateral to access funding, so that they can support the financial needs of individuals and businesses that are affected by the COVID-19 pandemic.
    • MAS will also expand the range of collateral that banks in Singapore can use to access USD liquidity from the MAS USD Facility. The MAS USD Facility was established in March 2020 to support the stability of USD funding conditions in Singapore. At present, banks in Singapore can borrow USD by pledging eligible SGD-denominated collateral. Banks will be able to obtain USD liquidity by pledging a wider pool of cash and marketable securities from September 28, 2020, in line with what is accepted at the SGD Term Facility. The expansion of the eligible collateral pool at the MAS USD Facility will provide banks greater flexibility in managing their USD liquidity.

    Keywords: Asia Pacific, Singapore, Banking, Liquidity Risk, COVID-19, Basel, Systemic Risk, D-SIBs, SGD Term Facility, MAS

    Featured Experts
    Related Articles
    News

    APRA Finalizes Guidance on Management of Climate Change Risks

    The Australian Prudential Regulation Authority (APRA) released the final Prudential Practice Guide on management of climate change financial risks (CPG 229) for banks, insurers, and superannuation trustees.

    November 26, 2021 WebPage Regulatory News
    News

    European Council Adopts Position on Digital Finance Package Proposals

    The European Council adopted its position on two proposals that are part of the digital finance package adopted by the European Commission in September 2020, with one of the proposals involving the regulation on markets in crypto-assets (MiCA) and the other involving the Digital Operational Resilience Act (DORA).

    November 25, 2021 WebPage Regulatory News
    News

    PRA Proposes Rulebook Changes; BoE Extends BEEDS Testing Window

    The Prudential Regulation Authority (PRA) is proposing, via the consultation paper CP21/21, to apply group provisions in the Operational Resilience Part of the PRA Rulebook (relevant for the Capital Requirements Regulation or CRR firms) to holding companies.

    November 25, 2021 WebPage Regulatory News
    News

    EC Proposes New Measures Under Capital Markets Union Package

    The European Commission (EC) has adopted a package of measures related to the Capital Markets Union.

    November 25, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards to Calculate Risk-Weights of CIUs Under CRR

    The European Banking Authority (EBA) published the final report on draft regulatory technical standards for the calculation of risk-weighted exposure amounts of collective investment undertakings or CIUs, in line with the Capital Requirements Regulation (CRR).

    November 24, 2021 WebPage Regulatory News
    News

    FED Outlines Lending Conditions and Supervisory Activities in H1 2021

    The Board of Governors of the Federal Reserve System (FED) published a report that summarizes banking conditions in the United States, along with the supervisory and regulatory activities of FED.

    November 24, 2021 WebPage Regulatory News
    News

    APRA Expects Boards to Strengthen Ability to Oversee Cyber Resilience

    The Australian Prudential Regulation Authority (APRA) recently completed two pilot initiatives in its 2020-2024 Cyber Security Strategy, which was published in November 2020.

    November 23, 2021 WebPage Regulatory News
    News

    FSB Updates List of Global Systemically Important Banks

    The Basel Committee on Banking Supervision (BCBS) published further information related to its 2021 assessment of global systemically important banks (G-SIBs), with additional details to help understand the scoring methodology.

    November 23, 2021 WebPage Regulatory News
    News

    FASB Proposes Improvements to Credit Losses Standard

    The Financial Accounting Standards Board (FASB) is consulting on an Accounting Standards Update and the associated taxonomy improvements for requirements on troubled debt restructurings and vintage disclosures under the credit losses standard (for financial instruments) topic 326.

    November 23, 2021 WebPage Regulatory News
    News

    US Agencies Issue Statement on Crypto-Asset Policy Initiatives

    US Agencies issued a statement that summarizes the work undertaken during the interagency policy sprints focused on crypto-assets and provides a roadmap of future work related to crypto-assets.

    November 23, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7733