SINGAPORE: The strong growth in foreign currency deposits in Singapore this year has come from diverse sources – domestic, regional and beyond the region – and for varied reasons, said the Monetary Authority of Singapore (MAS) on Sunday (Jun 7).
“No single region or country source dominates,” it added in a media statement.
The central bank’s comments come after media reports earlier this week suggested that there were large flows of deposits from Hong Kong to Singapore. These reports are incorrect, said MAS.
According to a Reuters report on Jun 5, data showed that foreign-currency deposits at banks in Singapore almost quadrupled to a record S$27 billion in April from a year earlier.
Although the data did not break down the origin of the inflows, analysts pointed to the turbulence in Hong Kong.
“Media reports that said foreign currency deposits at Singapore’s banks jumped almost four-fold on a year-on-year basis in April 2020 appear to have focused on such deposits in just the Domestic Banking Units (DBU) and ignored the Asian Currency Units (ACU),” said MAS on Sunday.
“It is not meaningful to look at only the foreign currency deposits in the DBUs as they make up less than 5 per cent of the total of such deposits across both the DBUs and ACUs.”
DBUs and ACUs are ledgers of the same bank held separate for regulatory purposes.
MAS had announced in 2015 that the two ledgers would be merged as there was no longer a meaningful purpose for the separation.
Total foreign currency non-bank deposits in Singapore’s banking system stood at S$781 billion at the end of April this year, 20 per cent higher than a year ago, said MAS.
“There are some well-known global drivers of this deposit growth amid the current COVID-19 related economic slump, including central bank actions that increase liquidity in the financial system, banks and corporate treasuries raising their liquidity profiles, and a higher level of precautionary savings by households,” it said, adding that other financial centres have also seen significant deposit growth.