MAS further extends US$60 billion swap facility with US Fed amid ongoing pandemic

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SINGAPORE – The Monetary Authority of Singapore (MAS) announced on Thursday (Dec 17) the further extension of a US$60 (S$79.7 billion) with the US Federal Reserve to facilitate US dollar lending to businesses in Singapore and the region amid the Covid-19 .

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.

In July, both the swap line and MAS USD Facility were extended through end-March 2021.

They have both been extended again for another six months through Sept 30, 2021.

Since its launch, the MAS USD Facility has provided about US$23 billion to banks, for use in Singapore and the region, said Singapore’s central bank.

As an international financial centre, Singapore plays a key role in intermediating cross-border USD funding within Asia, added MAS.

“The extension of the MAS USD Facility will continue to promote stability in USD funding conditions and anchor market confidence,” it said.

Financial markets have been hit by the coronavirus crisis as travel restrictions and lockdowns shut large swathes of business activity 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 the Covid-19 pandemic.

“These swap facilities reinforce the improvements in global USD funding conditions and provide certainty to market participants that USD funding will remain available to meet their needs,” said MAS.

It added that it has maintained ample SGD and USD liquidity in the banking system through its daily market operations, which complements the MAS USD Facility and enables banks to continue supporting the needs of businesses and individuals in Singapore and the region amid the coronavirus pandemic.

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