SINGAPORE'S financial system has weathered the crisis well and the economy has rebounded strongly, but risks still remain, said the Monetary Authority of Singapore (MAS).

In its annual Financial Stability Review released on Monday, the central bank said one of the key risks is a renewed rise in speculative activity in the property market.

'Price levels and transaction activity bear close monitoring,' the MAS said. 'As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted.'

Another potential risk - which would have an adverse effect on companies, unemployment and banks - is if the global economic recovery stalls, the report said.

A correction in global financial markets could also be on the cards, since the recent rally appears to have pulled ahead of fundamentals.

Asian central banks may also have to tighten monetary policy before developed economies do, which could lead to problems, said the MAS. If Asian countries raise rates much earlier than the developed world, more money would flow into the region, putting pressure on the exchange rate and potentially resulting in asset price bubbles.