Singapore, Thailand widen currency collateral agreement

Monetary Authority of Singapore and Bank of Thailand will accept a broader range of collateral in their liquidity provisioning facilities.

Both parties have signed a Memorandum of Agreement to establish a reciprocal reciprocal cross-border collateral arrangement that will help provide "greater flexibility" in the liquidity management of financial institutions in both countries.

"Under this arrangement, eligible financial institutions operating in Singapore may obtain Singapore Dollar (SGD) liquidity from MAS by pledging Thai Baht (THB) or Thai government and central bank securities with MAS," said MAS in a release.

"Similarly, eligible financial institutions operating in Thailand may obtain THB liquidity from BOT by pledging SGD or Singapore government and central bank securities," it said.

Mr. Prasarn Trairatvorakul, Governor, BOT, said “The reciprocal cross-border collateral arrangement highlights the facilitating role of both the MAS and BOT in cross-border banking activities and liquidity management of financial institutions in both countries. At the same time, it strengthens the co-operation between both central banks.”