In a joint press statement issued by MAS and Ministry of Finance yesterday night, the Singapore government announced that it would guarantee all Singdollar and foreign currency deposits of individual and non-bank customers in licensed banks, finance companies and merchant banks.
The guarantee of up to S$150 billion will be more than enough to cover possible liabilities arising from the failure of any financial institution. It takes immediate effect and will remain in place until 31 December 2010.
This announcement came in the light of other countries also providing similar guarantees. Not following in their footsteps might mean an outflow of funds from Singapore banks.
As a sign of how much fear there is in the market right now, my friend told me his mum was frantically telling him that OCBC was collapsing. A rumour triggered no doubt by this announcement.
And I cheekily turned to my friend and said, “Look, here’s another sign that the market is close to a bottom.“