MAS debunks report of large deposit flow from Hong Kong to Singapore

Don’t just refer to foreign currency deposits, Singapore's regulator said.

The Monetary Authority of Singapore (MAS) has said that media reports suggesting that there were large flows of deposits from Hong Kong to Singapore is “incorrect.”

“Whilst foreign currency deposits in Singapore have grown substantially since the beginning of this year, the order of magnitude is much less than cited in some media reports. The growth in foreign currency deposits has come from diverse sources and for varied reasons,” the regulator said in a press release.

The regulator was referring to an article released by Bloomberg on 2 June entitled “Singapore’s Record Deposits Seen Signaling Risk Aversion.” The article noted the four-fold jump in currency deposits jumped in April 2020 as its basis for discussion.

“It is not meaningful to look at only the foreign currency deposits in the DBUs as they make up less than 5% of the total of such deposits across both the DBUs and ACUs. The DBUs and ACUs are ledgers of the same bank that were held separately for regulatory purposes; MAS announced in 2015 that the two ledgers would be merged as there was no longer a meaningful purpose for the separation,” MAS said.

Total foreign currency non-bank deposits in Singapore’s banking system stood at $781b at the end of April this year, 20% higher than a year ago, MAS further clarified.

“The strong growth in foreign currency deposits in Singapore this year has come from a variety of sources – domestic, regional, and beyond the region. No single region or country source dominates,” MAS added.

Further, MAS listed several other global drivers of the deposit growth amidst the current COVID-19 related economic slump. These include the 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.

Other financial centres have also seen significant deposit growth, MAS concluded.