On Thursday, an announcement regarding new steps that will give banks more options to increase their liquidity was made by Singapore's central bank. However, it also acknowledged that its monetary policy remains appropriate to support the economy.

The basic aim of the Monetary Authority of Singapore's new measures is to aid banks to better manage their risks and liquidity profiles.

The measures would come to effect immediately. It should be noted that triple A-rated Singapore dollar-denominated debt securities would be accepted by central bank, issued by sovereigns, organizations that aren't tied to any one sovereign country such as the World Bank, and state-backed companies, as collateral.

The ultimate motive of these measures is to deliver financial institutions a more flexible pool of collateral, apart from providing a preemptive measure to meet any liquidity problems faced by them in the future.

According to MAS Managing Director Heng Swee Keat, "The central bank will also enter cross-border collateral backing agreements with more central banks to accept high-rated foreign currencies and government debt securities as collateral."

Furthermore, Mr. Heng also said that the growth rate remains below trend, and inflationary pressures continue to be muted; even when the economy posted a sharp rebound in second quarter.