MAS issues liquidity risk management guidelines for banks, effective July 2027
Banks, merchant banks and finance companies supervised by MAS must meet MAS' liquidity risk management expectations — covering governance, stress testing, liquid-asset buffers and a tested contingency funding plan — from 10 July 2027
Change
On 10 July 2026 MAS issued Guidelines on Liquidity Risk Management (Banks) setting out its expectations for banks, merchant banks and finance companies on liquidity governance, risk appetite, measurement, stress testing, liquid-asset buffers, group-wide, currency and intraday liquidity, and contingency funding planning. The Guidelines take effect on 10 July 2027 and apply on a group basis for locally-incorporated Banks.
Why it matters
The Guidelines consolidate MAS' supervisory expectations against a Basel-aligned baseline updated for the March 2023 deposit-run experience, with explicit emphasis on digital-banking run dynamics — faster, larger outflows and social-media-driven confidence shocks — that Banks must reflect in stress assumptions, monitoring and contingency planning. Board and senior management accountability is central: the board owns the risk appetite and must review strategies, stress tests and the contingency funding plan at least annually, while senior management must maintain three-lines-of-defence controls and operational readiness. With a 10 July 2027 effective date, Banks and foreign bank branches have a defined window to benchmark and remediate their frameworks, stress-testing methodologies, liquid-asset buffers and contingency funding plans against the expectations.
Implications
- — Banks, merchant banks and finance companies supervised by MAS must be able to demonstrate, from 10 July 2027, that their liquidity risk management meets MAS' expectations across governance, risk appetite, measurement, stress testing, liquid-asset buffers and contingency funding — MAS assesses adherence in supervising the institution, so gaps against the Guidelines carry supervisory consequences even though the Guidelines are expectations rather than a Notice.
- — Boards and senior management must evidence active ownership: the board approving the liquidity risk appetite and reviewing strategy, stress tests and the contingency funding plan at least annually, and senior management maintaining three-lines-of-defence controls, new-product liquidity assessment and stress-test oversight — accountability cannot be delegated away to a committee such as ALCO.
- — Banks must calibrate stress testing and contingency funding for digital-banking run dynamics — faster and larger deposit outflows, real-time and out-of-hours liquidity monitoring, and news/social-media surveillance — and maintain an operationally ready, regularly tested contingency funding plan, with foreign bank branches holding a Singapore-specific plan rather than relying wholesale on the head-office framework.
Who is affected
- — Banks (locally-incorporated and foreign branches) supervised by MAS
- — Merchant banks and finance companies supervised by MAS
- — Boards, senior management and ALCO-equivalent committees responsible for liquidity risk at these institutions
What to watch
- — Takes effect: 10 July 2027 — the Guidelines apply from this date; Banks and foreign bank branches should benchmark and remediate their liquidity frameworks, stress testing, liquid-asset buffers and contingency funding plans against MAS' expectations before then.