JULY 17, 2009, 4:59 A.M. ET
MAS Gives Singapore Banks Options to Increase Liquidity
By P.R. VENKAT
SINGAPORE -- Singapore's central bank Thursday announced new steps that will give banks more options to increase their liquidity, while saying its monetary policy remains appropriate to support the economy.
The Monetary Authority of Singapore's new measures aim to help banks better manage their risks and liquidity profiles.
Effective immediately, the central bank will accept triple A-rated Singapore dollar- denominated debt securities issued by sovereigns, organizations that aren't tied to any one sovereign country such as the World Bank, and state-backed companies as collateral.
The measures are aimed at giving financial institutions more a flexible pool of collateral and are also a preemptive measure to meet any liquidity problems faced by them in the future.
MAS Managing Director Heng Swee Keat said the central bank will also enter cross-border collateral backing agreements with more central banks to accept high-rated foreign currencies and government debt securities as collateral.
Last month, the MAS said it had signed a memorandum of understanding with the Dutch central bank under which banks from both countries can ask for liquidity assistance.
Mr. Heng also said that while the economy posted a sharp rebound in second quarter, the growth rate remains below trend and inflationary pressures continue to be muted.
The Singapore economy is recovering with data this week showing gross domestic product grew by an annualized, seasonally-adjusted 20.4% in the April to June period from the previous quarter.
The MAS raised its inflation outlook, but its new forecast suggests it doesn't expect inflation to pose a problem this year.
It now expects the consumer price index will range between a rise of 0.5% and a decline of 0.5%. Previously, it had forecast prices would be flat or fall 1% this year.
Separately, Mr. Heng said the global economic crisis hit the value of MAS investments, taking a heavy toll its bottom line in the fiscal year ended March 31.
The central bank recorded a net loss of 9.2 billion Singapore dollars (US$6.34 billion) in the last fiscal year, compared with a net profit of S$7.44 billion in the previous year, he said.
"With the broad based upturn in the financial markets after the close of the financial year, the valuation of MAS's foreign assets has improved and more than half of the losses have been recovered," he said.
MAS total assets currently stand at S$264.75 billion.
Write to P.R. Venkat at [email protected]
MAS Gives Singapore Banks Options to Increase Liquidity
By P.R. VENKAT
SINGAPORE -- Singapore's central bank Thursday announced new steps that will give banks more options to increase their liquidity, while saying its monetary policy remains appropriate to support the economy.
The Monetary Authority of Singapore's new measures aim to help banks better manage their risks and liquidity profiles.
Effective immediately, the central bank will accept triple A-rated Singapore dollar- denominated debt securities issued by sovereigns, organizations that aren't tied to any one sovereign country such as the World Bank, and state-backed companies as collateral.
The measures are aimed at giving financial institutions more a flexible pool of collateral and are also a preemptive measure to meet any liquidity problems faced by them in the future.
MAS Managing Director Heng Swee Keat said the central bank will also enter cross-border collateral backing agreements with more central banks to accept high-rated foreign currencies and government debt securities as collateral.
Last month, the MAS said it had signed a memorandum of understanding with the Dutch central bank under which banks from both countries can ask for liquidity assistance.
Mr. Heng also said that while the economy posted a sharp rebound in second quarter, the growth rate remains below trend and inflationary pressures continue to be muted.
The Singapore economy is recovering with data this week showing gross domestic product grew by an annualized, seasonally-adjusted 20.4% in the April to June period from the previous quarter.
The MAS raised its inflation outlook, but its new forecast suggests it doesn't expect inflation to pose a problem this year.
It now expects the consumer price index will range between a rise of 0.5% and a decline of 0.5%. Previously, it had forecast prices would be flat or fall 1% this year.
Separately, Mr. Heng said the global economic crisis hit the value of MAS investments, taking a heavy toll its bottom line in the fiscal year ended March 31.
The central bank recorded a net loss of 9.2 billion Singapore dollars (US$6.34 billion) in the last fiscal year, compared with a net profit of S$7.44 billion in the previous year, he said.
"With the broad based upturn in the financial markets after the close of the financial year, the valuation of MAS's foreign assets has improved and more than half of the losses have been recovered," he said.
MAS total assets currently stand at S$264.75 billion.
Write to P.R. Venkat at [email protected]
