THE Singapore Government yesterday pledged to guarantee all deposits of individual and non-bank customers in banks, finance companies and merchant banks licensed by the Monetary Authority of Singapore (MAS).

The guarantee, which covers deposits in Singapore dollar and foreign currency, will take immediate effect and will remain in place until Dec 31, 2010.

"All depositors, big and small, corporates and individuals, including those under the current Deposit Insurance Scheme administered by the Singapore Deposit Insurance Corporation will now enjoy protection from the Government on the full amount of their deposits for the duration of the guarantee," said the statement by MAS and the Ministry of Finance.

"The Government guarantee will also be extended to deposits placed with credit co-operatives registered with the Registry of Co-operative Societies."

The guarantee will be backed by $150 billion of government reserves, the statement said.

MAS' decision came after Hong Kong, Australia and New Zealand started providing blanket guarantees on all deposits amid a crisis of confidence in global financial markets.

This move, said MAS, has set off a dynamic that puts pressure on other jurisdictions to respond or risk a potential weakening of their own financial institutions and financial sectors.

"This is why although Singapore's banking system continues to be sound and resilient, the Government has decided to take precautionary action to avoid an erosion of banks' deposit base and ensure a level international playing field for banks in Singapore," it said.

MAS also stressed that banks and financial institutions in Singapore are operating normally.

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