THE Monetary Authority of Singapore (MAS) said last night that it will ensure local banks are ‘not disadvantaged’, adding that it is studying measures other countries have taken to shore up confidence in their financial systems.
Its statement came a few hours after Hong Kong guaranteed all bank deposits, a move that has put pressure on Singapore’s authorities to follow suit.
It also came after a second day of surging share markets driven by growing investor confidence that the financial crisis may finally be at a turning point.
The central bank said it ‘is assessing the impact of the extraordinary measures taken elsewhere. We will take the necessary steps to ensure that banks in Singapore are not disadvantaged and are able to operate on an equal footing with other banking systems internationally’.
Banking sources here told The Straits Times it is a sign that MAS is considering securing all bank deposits in Singapore.
Several governments have already done so: Germany and France are trying to rebuild trust in banks with state guarantees worth more than ¥1 trillion (S$2 trillion) combined, while Australia and New Zealand have also fully backed bank deposits. The US announced yesterday it is investing US$250 billion (S$366 billion) in banks as ‘an essential short-term measure’.
But the final impetus for MAS appears to be Hong Kong’s move to guarantee all deposits until 2010. A local banker, who declined to be named, said: ‘Imagine if rich people, who are able to move funds freely, want to place their money in Hong Kong instead.
‘We’re not saying Singapore is not safe. But given the current situation, people might be thinking about moving their funds where there is greater assurance.’
Bankers were unsure how long MAS would guarantee deposits for – if at all – but they said the objective would ‘just be to calm nerves’.
All savings in a full bank in Singapore are insured for up to $20,000 under the Deposit Insurance Scheme of the Singapore Deposit Insurance Corporation.
MAS reiterated that Singapore’s financial system remains stable and robust, with institutions here sound and operating normally.
It said: ‘Our domestic Singapore dollar money and foreign exchange market have been calm and banks have been able to obtain funding in the interbank market. Confidence in Singapore’s markets and financial institutions remains high.
‘We have not had to take any exceptional measures.’
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