MAS USD facility, US$60b swap line with Fed to expire on Dec 31
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Set up on March 26 last year, the facility offered up to US$60 billion of backstop funding to banks.
PHOTO: ST FILE
SINGAPORE - The Monetary Authority of Singapore (MAS) said its US dollar (USD) facility, set up during the early months of the Covid-19 pandemic to support US dollar lending to businesses in Singapore and the region, will expire on Dec 31.
This is as US dollar funding conditions in Singapore and the region have normalised and continue to be stable, MAS said on Friday (Dec 24).
Set up on March 26 last year, the facility offered up to US$60 billion (S$81.5 billion) of backstop funding to banks.
It was established on the back of a US$60 billion swap arrangement with the United States Federal Reserve, which will also expire on Dec 31. The swap line allows MAS to exchange Singapore dollars for US dollars, providing US dollar liquidity to financial institutions in Singapore.
The US central bank had established temporary swap lines with nine central banks that month to lessen strains in US dollar funding markets from increased demand for the greenback in the rush to safe haven assets. The swap lines contributed to central banks' efforts to maintain stability and normal functioning of financial markets as the pandemic unfolded.
The US$60 billion swap arrangement and the MAS USD facility were extended thrice through to Dec 31, 2021.
MAS said on Friday that its USD facility has provided US$24.6 billion through 91 transactions to a broad mix of local, regional and international banks since its inception last March.
"This helped to intermediate cross-border USD funding, for use in Singapore and the region, in the midst of the crisis," it added.
But use of the MAS USD facility has declined significantly since July last year, the central bank said.
"Given these improvements in global US dollar funding conditions, the Federal Reserve will let the temporary swap lines for the central banks expire, and MAS will also discontinue operation of the facility," it said.
MAS added it continues to remain vigilant to US dollar funding conditions in Singapore and will be prepared to take action in the event of severe strains in the US dollar funding market.
