MAS extending US$60b swap facility with US Fed

The Monetary Authority of Singapore (MAS) will be extending a US$60 billion (S$82.55 billion) swap facility with the US Federal Reserve to facilitate its US dollar lending to businesses in Singapore and the region amid the coronavirus pandemic.

The swap line was set up on March 19 to let the MAS exchange Singapore currency for US dollars with the US central bank. On the back of this, the MAS established the MAS USD Facility on March 26 to lend US dollars to banks in Singapore. Both the swap line and MAS USD Facility have been extended to end-March next year.

Since its launch, the MAS USD Facility has provided about US$22 billion to banks for use in Singapore and the region, MAS said yesterday. As an international financial centre, Singapore plays a key role in intermediating cross-border US dollar funding within Asia.

The extension of the facility will anchor market confidence and reinforce the stability of Singapore's financial system, MAS added.

Financial markets have been under strain from the pandemic as travel restrictions and lockdowns hit economies around the world.

The Fed's network of swap facilities with 14 central banks, including the MAS, has provided a critical backstop for US dollar funding needs globally, and contributed to central banks' efforts to maintain the stability of financial markets.

These swap facilities will help sustain recent improvements in global US dollar funding markets and provide certainty to market participants that US dollar funding will remain available to meet their needs, said MAS.

MAS said it has continued to maintain a high level of Sing dollar and US dollar liquidity in the banking system through its daily market operations. This complements the MAS USD Facility, and ensures funding to banks remains ample so they can maintain the flow of credit to businesses and individuals in Singapore and the region.

A version of this article appeared in the print edition of The Straits Times on July 31, 2020, with the headline 'MAS extending US$60b swap facility with US Fed'. Print Edition | Subscribe