Malaysia, Singapore in cross-border banking pact

“This new initiative will facilitate more effective liquidity management by our financial institutions,” Bank Negara governor Tan Sri Zeti Akhtar Aziz said in a joint press release
yesterday.

Read more: Malaysia, Singapore in cross-border banking pact http://www.btimes.com.my/articles/20111129004710/Article/#ixzz1fQlex8t7

Kuala Lumpur: The central banks of Malaysia and Singapore have inked a memorandum of understanding to establish a cross-border collateral arrangement aimed at enhancing liquidity facilities to banks in both countries.

 Under the agreement, banks operating in Singapore may obtain Singapore dollar (S$) liquidity from the Monetary Authority of Singapore (MAS) by pledging ringgit or ringgit-denominated sovereign and central bank securities with MAS. 

Similarly, banks operating in Malaysia may obtain ringgit liquidity from Bank Negara Malaysia by pledging S$ or S$-denominated sovereign and central bank securities. 

"This new initiative will facilitate more effective liquidity management by our financial institutions," Bank Negara governor Tan Sri Zeti Akhtar Aziz said in a joint press release yesterday. 

MAS' managing director Ravi Menon added that it would help build confidence among banks in both countries.