mas has launched a facility to lend to banks and finance companies at 0. 1 % for a tenure of two years, for them to on - lend to smes. the formula is simple, with each party doing what it is best at : the government underwrites most of the risk of lending ; the central bank provides low - cost funding ; and the banks decide who to lend to based on their credit assessment. 4 / 15 bis central bankers'speeches the third initiative is to provide temporary legislative protection for businesses and individuals who are unable to fulfil certain contractual obligations due to covid - 19. this includes temporary reliefs on loans to smes secured against property or businessrelated fixed assets as well as hire purchase agreements. the legislation also provides for a mandated co - sharing of rental obligations between the government, landlords, and tenants. mas ’ response to the covid - 19 economic crisis mas has responded to the covid - 19 economic crisis in six broad areas : ensuring monetary stability ; ensuring financial stability ; providing credit and insurance reliefs for individuals and smes ; providing regulatory reliefs for financial institutions ; ensuring operational resilience of financial institutions ; and positioning the financial sector to emerge stronger. monetary stability mas has focused on ensuring monetary stability through accommodative monetary policy and judicious money market operations. mas eased monetary policy in april this year by setting the policy band for the nominal effective exchange rate on a 0 % appreciation path, starting from the prevailing lower level of the exchange rate. the lower starting level of the exchange rate is consistent with the downward shift in inflation and economic activity. keeping the exchange rate on a stable path going forward helps to underpin confidence amid the covid - 19 crisis. the aim of monetary policy during this crisis is to prevent a broadening of disinflationary pressures that would be destabilising for the economy. mas does not seek to enhance export competitiveness through a weaker exchange rate. such a policy will be especially futile in the current circumstances, where the sharp decline in global demand and supply - side frictions will offset any relative price advantages from a weaker exchange rate. through its money market operations, mas has ensured the smooth functioning of the short - term funding markets in singapore. when the covid - 19 shock hit financial markets in march this year, volatility spiked sharply and liquidity stresses emerged in global and domestic funding markets. the tighter financial conditions would have impaired banks ’ ability to fund themselves and extend credit

. mas has kept a higher level of singapore dollar liquidity in the banking system to ensure banks have ample funding to extend credit to the economy. interest rates in singapore have fallen, with the one - month sibor currently around 0. 25 %, 5 / 15 bis central bankers'speeches compared to about 1. 75 % at the start of the year. singapore ’ s long term interest rates have also fallen in tandem. the 10 - year sgs yield is currently trading at about 0. 9 %, compared to 1. 7 % at the start of the year. this has helped to lower borrowing costs in the corporate bond market. mas has also taken steps to provide us dollar liquidity to support needs in singapore and in the region. as an international financial centre, singapore plays a key role in intermediating the flow of us dollar denominated cross - border credit from advanced economies to emerging asia. with global us dollar funding markets coming under strain earlier in march of this year, mas stepped up the provision of us dollar liquidity through its daily money market operations. we provided up to us $ 1 billion of foreign exchange swaps per day, a 25 % increase from our usual volumes. mas also set up a us $ 60 billion us dollar facility that is available to all banks, on the back of the swap arrangement with the us federal reserve. this facility has helped to stabilise us dollar funding conditions in singapore, and enabled us dollar lending to businesses in singapore and in the region. about us $ 21 billion has been provided through this facility. financial stability the covid - 19 shock has also increased the risks to global financial stability. the world entered the current crisis with one strong card and one weak card. the strong card is the banking sector. globally, banks are generally in good shape, with healthy capital and liquidity buffers. the weak card is the corporate sector. in many parts of the world, corporate debt levels were already high pre - covid, and will increase further through the course of this crisis. with tight cash flows, over - leveraged entities could face financial distress, leading in turn to ratings downgrades and corporate defaults. mounting corporate defaults will strain banks ’ profitability and capital positions. the strong card could become progressively weaker. if this happens, banks will be less able to sustain credit to the real economy. worse still, if funding conditions also tighten and confidence is shaken, some banks could run into trouble, possibly triggering a