MAS extends US$60 billion swap facility with US Fed amid Covid-19 pandemic

The currency swap line allows the Monetary Authority of Singapore to exchange Singapore currency for US dollars with the US central bank.
The currency swap line allows the Monetary Authority of Singapore to exchange Singapore currency for US dollars with the US central bank.PHOTO: ST FILE

SINGAPORE - The Monetary Authority of Singapore (MAS) announced on Thursday (July 30) the extension of a US$60 billion (S$82.45 billion) swap facility with the US Federal Reserve to facilitate its US dollar lending to businesses in Singapore and the region amid the ongoing coronavirus pandemic.

The currency swap line, set up on March 19 for at least six months, allows MAS to exchange Singapore currency for US dollars with the US central bank. On the back of this swap facility, it established the MAS USD Facility on March 26 to lend USD to banks in Singapore. Both the swap line and MAS USD Facility have been extended through end-March 2021.

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

The extension of the MAS USD Facility will anchor market confidence and reinforce the stability of the financial system in Singapore, MAS added.

Financial markets have been under strain from the Covid-19 crisis as travels restrictions and lockdowns shut large swathes of economies around the world.

The Fed's network of USD swap facilities with 14 central banks, including the MAS, has provided a critical backstop for USD funding needs globally, and contributed significantly to central banks' efforts to maintain stability and normal functioning of financial markets during this Covid-19 pandemic.

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

 

MAS said it has continued to maintain a high level of SGD and USD liquidity in the banking system through its daily market operations. This complements the MAS USD Facility, and ensures that funding to banks remains ample so that they can maintain the flow of credit to businesses and individuals in Singapore and the region amid the Covid-19 pandemic, it said.