Singapore changes liquidity rules for major retail banks

Singapore said banks with a "significant retail presence" in the city-state will soon be required to maintain some liquid assets in the country to support short-term cash outflows.

The new liquidity framework applies to all currencies, and banks also need to hold liquid Singapore dollar assets separately to manage their liabilities in the local currency, Lim Hng Kiang, the deputy chairman of the Monetary Authority of Singapore, said in a speech.

The proposal comes six months after the central bank warned rising global interest rates could weigh on household and corporate debt and pose risks for banks.

Foreign banks operating in the country include Citigroup and Standard Chartered.

"While MAS recognises that there may be cost efficiencies in managing liquidity centrally at the group level, there can be significant obstacles to the free movement of liquidity across borders during a stress scenario," said Lim, who is also minister for trade and industry.

The foreign banks will be required to meet a Singapore dollar liquidity coverage ratio of 100 per cent, Lim said.

He did not specify a deadline for liquid holdings such as cash for the short term.