The Monetary Authority of Singapore (MAS) and Bank Negara Malaysia (BNM) jointly announced today 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.

Under this arrangement, eligible financial institutions operating in Singapore may obtain Singapore Dollar (SGD) liquidity from MAS by pledging Malaysian Ringgit (MYR) or Ringgit-denominated sovereign and central bank securities with MAS. Similarly, eligible financial institutions operating in Malaysia may obtain MYR liquidity from BNM by pledging SGD or SGD-denominated sovereign and central bank securities.

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 the cooperation of both central banks in the area of domestic liquidity management.

Dr Zeti Akhtar Aziz, Governor, BNM, said "This new initiative will facilitate more effective liquidity management by our financial institutions. The arrangement will also serve to reinforce the greater regional orientation of our financial institutions which will in turn support the economic potential of our two economies."

Mr Ravi Menon, Managing Director, MAS, said "The cross-border collateral arrangement with BNM is a valuable addition to the existing network of bilateral arrangements that MAS has with other central banks. It will help build confidence among financial institutions operating in our two markets."
 

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