Under this arrangement, any eligible financial institutions operating here may obtain Singapore dollars from the Monetary Authority of Singapore (MAS) by pledging Thai baht or Thai government and central bank securities with the MAS.
Similarly, financial institutions operating in Thailand may obtain Thai baht from the Bank of Thailand by pledging Singapore dollars or Singapore government and central bank securities.
The arrangement allows both central banks to accept a wider range of collateral in their liquidity provisioning facilities.
Ravi Menon, the MAS managing director, said: “In times of market stress, cross-border collateral arrangements between central banks can help sustain liquidity and thereby promote financial stability. This new arrangement with BOT recognises the deep inter-linkages between our two economies.”