SINGAPORE (June 7): The Monetary Authority of Singapore (MAS) has refuted recent reports suggesting large flows of deposits from Hong Kong to Singapore. The reports were based on foreign currency deposits data.

“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,” said MAS on June 7.

On top of the year-long street protests, Hong Kong will be subject to tighter security laws imposed by China. US has recently deemed Hong Kong to be no longer “autonomous”. The developments have led to suggestions that wealthy Hong Kongers are hedging by shifting their assets overseas, including Singapore.

“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.

“Other financial centres have also seen significant deposit growth,” Singapore’s central bank added.

As at end of April, total foreign currency non-bank deposits in Singapore’s banking system stood at $781 billion, up 20% y-o-y.

MAS suggested that reports of an almost four-fold jump in foreign currency deposits appear to have focused on such deposits in just the Domestic Banking Units (DBU), and ignored the Asian Currency Units (ACU).

“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 held separate 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,” said MAS.