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MAS enhances RMB liquidity through a new RMB 25 billion initiative for banks

Under this new initiative, RMB funding of up to three months will be channelled to the Primary Dealers (PDs) through MAS’ money market operations

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The Monetary Authority of Singapore (MAS) yesterday (23 Nov) announced the launch of a new initiative to provide up to RMB 25 billion of funding to banks in Singapore. The initiative is aimed at deepening RMB liquidity and further strengthening 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 three 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 initiative, the central bank will discontinue the current RMB 5 billion MAS Overnight RMB Liquidity Facility from 23 November 2020.

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MAS said that market participants have indicated that the placement of longer tenors and larger amount of RMB funding by the initiative represents 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.

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