SINGAPORE – Singapore’s central bank announced fresh measures to protect depositors in the city-state, creating a liquidity buffer of $20 billion to back up a deposit insurance scheme in the case of a banking crisis.

The Monetary Authority of Singapore (MAS) said in its annual report it had on Feb 9 agreed to provide the Singapore Deposit Insurance Corp Ltd with a contingent liquidity facility of up to $20 billion “in the event a deposit insurance scheme fails and liquidity is needed for compensation payments to insured depositors”.

“For the financial year ended March 31, 2012, there were no request and drawdown on the facility.”

The insurance scheme currently protects deposits of up to $50,000 with a bank, an amount increased 2.5 times two years ago following the 2008 financial crisis.

Recently the central bank also announced that retail-orientated foreign banks, which have large operations in Singapore, will be required to set up local legal entities aimed at protecting depositors.

Singapore’s central bank in 2008 joined other central banks in the region by guaranteeing all bank deposits for a period of two years.