When the COVID-19 shock hit financial markets in March this year, volatility spiked sharply and liquidity stresses emerged in global and domestic funding markets. The tighter financial conditions would have impaired banks’ ability to fund themselves and extend credit. MAS has kept a higher level of Singapore Dollar liquidity in the banking system to ensure banks have ample funding to extend credit to the economy. Interest rates in Singapore have fallen, with the one-month SIBOR currently around 0.25%, 5 / 15  BIS central bankers' speeches  compared to about 1.75% at the start of the year. Singapore’s long term interest rates have also fallen in tandem. The 10-year SGS yield is currently trading at about 0.9%, compared to 1.7% at the start of the year. This has helped to lower borrowing costs in the corporate bond market. MAS has also taken steps to provide US Dollar liquidity to support needs in Singapore and in the region. As an international financial centre, Singapore plays a key role in intermediating the flow of US Dollar denominated cross-border credit from advanced economies to emerging Asia. With global US Dollar funding markets coming under strain earlier in March of this year, MAS stepped up the provision of US Dollar liquidity through its daily money market operations. We provided up to $ billion of foreign exchange swaps per day, a 25% increase from our usual volumes.
Ravi Menon: Monetary Authority of Singapore's Annual Report 2019/20 Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at MAS' Annual Report 2019/20 Virtual Media Conference, Singapore, 26 July 2020. * * * Good morning, and welcome to MAS’ first virtual media conference for the annual report. I hope everyone has been keeping well. GLOBAL ECONOMY Let me begin with the global economy. There are three points I’d like to make. The world is facing an unprecedented economic situation. The outlook is highly uncertain. Recovery will be uneven. The world is facing a public health crisis and a consequent economic crisis. The COVID-19 virus has now spread to all corners of the world. Measures necessary to contain the pandemic – lockdowns, movement restrictions, border controls, and safe distancing – have brought many economic activities to a grinding halt. We are now in the midst of an economic recession without modern precedent. The global economy contracted nearly 14% q-o-q [1] in the first quarter of 2020 – this is almost three times deeper than the sharpest decline seen during the Global Financial Crisis. The contraction in the second quarter is likely to have been even deeper, since this is when economies outside China were most severely affected by the virus and shutdown measures. The policy responses to the COVID-19 crisis have been equally unprecedented – in scale and in speed. Governments injected massive fiscal stimulus, estimated on average to be twice the fiscal impulse in 2009.