Category: SGD (Singapore Dollar)

In this section we provide an explanation of the flow of funds that leads to the accumulation of Official Foreign Reserves (OFR), as well as the periodic transfer of excess OFR from MAS to Government.

There is no new money creation arising from the purchase of RMGS by MAS.

“Monetary financing” of governments typically happens when central banks purchase government securities on the primary market and credit the proceeds to the government, i.e. the central bank “prints money” to help fund the government budget.

Since 1981 when GIC was set up, MAS has been making periodic transfers to the Government of OFR that has been in excess of what it needed to conduct monetary policy and ensure financial stability. This has enabled the Government to invest foreign reserves through GIC on a longer-term basis while still ensuring that MAS has sufficient OFR to carry out its mandate.

OFR is accumulated when MAS purchases US dollars in exchange for Singapore dollars, in order to moderate the appreciation of the Singapore dollar exchange rate. It is hence a consequence of MAS’ monetary policy, which since the early 1980s has been focused on keeping the exchange rate within its target policy band.

Monetary policy in Singapore is centred on the exchange rate. In the small and open Singapore economy, the exchange rate is the more effective tool for maintaining price stability. Learn more about our unique monetary policy framework.

The Singapore dollar (SGD) is the currency of the island state of Singapore. The symbol of the currency is S$. It is divided into 100 cents. The currency is issued and monitored by the Monetary Authority of Singapore.