Singapore and Japan cross collateral borders
26 July 2013 Tokyo
Image: Shutterstock
The Bank of Japan and the Monetary Authority of Singapore have established a cross-border collateral arrangement that lets foreign banks in Singapore get their hands on local dollars by using Japanese government bonds as collateral.
“Eligible financial institutions in Singapore can now obtain Singapore dollar liquidity from the monetary authority by pledging Japanese government securities with the firm,” said a statement from the bank, adding that the agreement will hopefully increase financial stability in Singapore.
The move will broaden the range of eligible collateral in the authority’s liquidity facility, and permits greater flexibility in the liquidity management of eligible financial institutions, including Japanese banks, which are operating in Singapore.
“This collaboration reinforces [our] commitment to support the long-standing economic and financial relationship between Japan and Singapore,” said a statement from the bank.
In 2011, Japan created a similar agreement with Thailand that allowed the use of Japanese government bonds as collateral.
“Eligible financial institutions in Singapore can now obtain Singapore dollar liquidity from the monetary authority by pledging Japanese government securities with the firm,” said a statement from the bank, adding that the agreement will hopefully increase financial stability in Singapore.
The move will broaden the range of eligible collateral in the authority’s liquidity facility, and permits greater flexibility in the liquidity management of eligible financial institutions, including Japanese banks, which are operating in Singapore.
“This collaboration reinforces [our] commitment to support the long-standing economic and financial relationship between Japan and Singapore,” said a statement from the bank.
In 2011, Japan created a similar agreement with Thailand that allowed the use of Japanese government bonds as collateral.
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