Singapore refuted the report of large flows of fund from Hong Kong on Sunday after various media reports suggested that the deposit inflow primarily came from Hong Kong because of the city's political unrest.
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 MAS.
“No single region or country source dominates,” the central bank noted, adding that those media reports are incorrect.
According to a Reuters report on June 5, foreign-currency deposits at banks in Singapore almost quadrupled to a record S$27 billion in April from a year ago.
Deposits from non-residents into the city-state’s banks spiralled 44% to a record S$62.14 billion (US$44.37 billion) in April from a year ago, marking the fourth straight monthly rise, according to MAS's data.
"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% of the total of such deposits across both the DBUs and ACUs, MAS pointed out.
DBUs and ACUs are ledgers of the same bank held separate for regulatory purposes. In 2015, MAS announced that the two ledgers would be merged as the separation no longer had a meaningful purpose.
According to MAS, total foreign currency non-bank deposits in Singapore’s banking system reached S$781 billion (US$560 billion) at end-April, 20% higher than a year ago.
There are some well-known global drivers of the deposit growth amid the pandemic, 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, MAS pointed out, adding that other financial centres have also seen significant deposit growth.