The Covid-19 pandemic has impacted the whole economic and financial system throughout the world

1. INDONESIA

Bank Indonesia (BI) reduced the policy rate by 125 bps cumulatively in February, March, June, July, and November 2020, to 3.75 percent. BI also announced other measures to ease liquidity conditions, including:

(i) lowering reserve requirement ratios for banks;

(ii) increasing the maximum duration for repo and reverse repo operations (up to 12 months);

(iii) introducing daily repo auctions;

(iv) increasing the frequency of FX swap auctions for 1, 3, 6 and 12 month tenors from three times per week to daily auctions; and

(v) increasing the size of the main weekly refinancing operations as needed. BI also adjusted macroprudential regulation to ease liquidity conditions and support bond market stability. A Presidential decree has expanded BI’s authority to maintain the stability of the financial system in the presence of the COVID-19 shock, including by facilitating BI liquidity assistance to banks, allowing BI to purchase government bonds in the primary market, and financing the deposit insurance agency (LPS) for bank solvency problems

2.SINGAPORE

On February 14, the Monetary Authority of Singapore (MAS) welcomed the announcements from banks and insurers in Singapore to support their customers facing financial difficulties due to the impact of the COVID-19 outbreak, while adhering to prudent risk assessments. On March 31, the MAS and the financial industry announced a detailed package of measures to help individuals and SMEs facing temporary cashflow difficulties. The package has three components: (i) help individuals meet their loan and insurance commitments; (ii) support SMEs with continued access to bank credit and insurance cover; and (iii) ensure interbank funding markets remain liquid and well-functioning. A second package announced on April 30 extends the scope of relief for individuals to a broader set of loan commitments.

On March 19, the MAS announced the establishment of a US$60 billion swap facility with the US Federal Reserve. The MAS is drawing on this facility to provide USD liquidity to Singapore banks through weekly auctions held every Monday since late March. On December 17, MAS announced that the swap facility has been further extended to end-September 2021.

On March 30, the MAS adopted a zero percent annual rate of appreciation of the policy band and reduced the mid-point to the prevailing level of the S$NEER, with no change to the width of the band.

On April 7 the MAS announced that it will adjust selected regulatory requirements and supervisory programs to enable financial institutions to better deal with issues related to the pandemic.

On April 8, 2020, the MAS announced a S$125 million support package to sustain and strengthen financial services and FinTech capabilities. The package, funded by the Financial Sector Development Fund, has three main pillars: (i) supporting workforce training and manpower costs; (ii) strengthening digitalization and operational resilience; and (iii) enhancing FinTech firms’ access to digital tools.

3.THAILAND

The policy rate has been reduced by 75 bps from 1.25 to 0.50 percent during 2020 and the contribution from financial institutions to the FIDF was reduced from 0.46 to 0.23 percent of the deposit base to provide space for future decreases in lending rates. In addition, measures to help businesses include: (i) soft loans by the Bank of Thailand (BOT) to financial institutions amounting to THB 500 billion for on-lending to SMEs; the government covers the first 6 months of interest and guarantees up to 60-70 percent of these loans; (ii) relaxation of repayment conditions for businesses including a loan payment holiday of 6 months for SMEs that expired on October 22; and suspension of principal and reduction of interest on the debts to SFIs. With the expiry of the payment holiday, the BOT has extended its standstill for commercial banks on updating their asset classifications and provisioning to the end of the year, to give additional time for any necessary debt restructuring with SME clients.

Measures to support stability in the financial sector include: (i) a Corporate Bond Stabilization Fund (BSF)established for the BOT to provide bridge financing of up to THB 400 billionby December 31, 2021to high-quality firms with bonds maturing during 2021, at higher-than-market ‘penalty’ rates; (ii) BOT purchase ofgovernment bonds to ensure the normal functioning of the government bond market (THB 100 billion in March 2020); (iii) reduction in BOT bond issuances; and (iv) a special facility to provide liquidity for mutual funds through banks.On November 12, the BOT lifted restrictions on dividends payouts by financial institutions, which was imposed in June 2020. However, the distribution of dividends should not exceed the last years payout ratio and half of this year's net profit.