Malaysia and Singapore signs deal setting up cross-border collateral arrangement

Financial institutions in Singapore may now obtain Singapore dollar liquidity from MAS by pledging Malaysian ringgit or ringgit-denominated sovereign and central bank securities.

The Monetary Authority of Singapore (MAS) and Bank Negara Malaysia (BNM) jointly announced Monday the signing of a memorandum of understanding (MoU) to establish a cross-border collateral arrangement aimed at enhancing liquidity facilities to financial institutions in both countries.

This collaboration highlights the growing significance of regionally-active financial institutions and the increased financial inter-linkages between the two economies, particularly in trade, investment and financial services, said a joint statement released here.

Under this arrangement, eligible financial institutions operating in Singapore may obtain Singapore dollar liquidity from MAS by pledging Malaysian ringgit or ringgit-denominated sovereign and central bank securities with MAS.

Similarly, eligible financial institutions operating in Malaysia may obtain Malaysian ringgit liquidity from Bank Negara by pledging Singapore dollars or Singapore dollar-denominated sovereign and central bank securities.

The statement said this arrangement will enhance the overall monetary and financial stability of both countries and the confidence of financial institutions in carrying out their business in the two markets.

It will also strengthen cooperation of the two central banks in the area of domestic liquidity management.

View the full story in Bernama.