Saturday, 24 July 2021

MAS introduces new RMB 25 billion enhanced liquidity facility

The Monetary Authority of Singapore (MAS) announced the launch of a new initiative to provide up to RMB 25 billion ($3.8 billion) of funding to banks in Singapore. The initiative will deepen RMB liquidity and further strengthen banks’ ability to meet the growing RMB business needs of their customers in Singapore and the region.

Under this new initiative, RMB funding of up to 3 months will be channelled to the Primary Dealers (PDs) through MAS’ money market operations. The RMB funds provided to the PDs will enhance their credit intermediation capabilities and the overall RMB market liquidity in Singapore.

To support the development of the offshore RMB market in Singapore, MAS previously established the MAS Overnight RMB Liquidity Facility, and the MAS RMB Facility. Banks could access these backstop facilities, to obtain overnight and term RMB liquidity respectively, as needed to facilitate settlement needs and financing of cross-border trade and investment.

With the introduction of the new RMB 25 billion ($3.8 billion) initiative, MAS will discontinue the current RMB 5 billion MAS Overnight RMB Liquidity Facility from 23 November 2020. Market participants have indicated that the placement of longer tenors and larger amount of RMB funding by the initiative represent significant enhancements over the MAS Overnight RMB Liquidity Facility. The MAS RMB Facility remains in operation and will continue to provide additional term funding as needed.

Re-disseminated by The Asian Banker