Singapore and Malaysia said Monday they have signed an agreement to increase financial co-operation by allowing easier access to funds denominated in the local currency from each other's central bank. The Monetary Authority of Singapore and Bank Negara Malaysia said in a joint statement that the cross-border arrangement would help ensure financial stability.
Under the arrangement, eligible financial institutions operating in Singapore may obtain Singapore dollars from the Monetary Authority of Singapore using ringgit-denominated securities as collateral. Similarly, eligible financial institutions operating in Malaysia can have access to Malaysian ringgit funds from Bank Negara Malaysia by pledging securities denominated in Singapore dollars, the statement said.
The arrangement "will facilitate more effective liquidity management by our financial institutions," said Malaysian central bank governor Zeti Akhtar Aziz. It "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," she said. Monetary Authority of Singapore managing director Ravi Menon said the agreement "is a valuable addition to the existing network of bilateral arrangements" the city-state has with other central banks. "It will help build confidence among financial institutions operating in our two markets," he said.
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