THE Monetary Authority of Singapore (MAS) will continue to step up its supervision of banks and financial markets to ensure they stay resilient in this and future financial crises, said Senior Minister Goh Chok Tong.

'Although the global financial condition has stabilised, the situation is fragile and we need to remain vigilant,' said Mr Goh, who is also MAS chairman, in an addendum to President S R Nathan's address at the opening of Parliament.

While banks here have not been directly affected by the global financial meltdown, they are still susceptible to 'risks of contagion' from problems elsewhere and may also be hit by 'second-round effects of the economic slowdown'.

In order to maintain the soundness of the financial system, the MAS will continue to work on strengthening the risk management systems and processes of banks.

The central bank will conduct 'thematic reviews' and stress tests to assess the vulnerabilities of financial institutions and fine-tune measures for them to 'mitigate financial stresses', said Mr Goh.

These include building up prudential capital buffers for banks that can help to absorb losses when necessary.