Singapore is not facing a credit bubble that puts the country or the banking system at any risk of crisis, the Monetary Authority of Singapore said in a statement on Tuesday evening.
Responding to media queries on the issue of a credit bubble, MAS added: "Serious observers and investors are not in doubt about the country's financial health."
An online article in Forbes published on Monday suggests that household debt has ballooned in Singapore, due to ultra-low interest rates. The growth in Singapore's credit bubble is linked to soaring property prices, the article said. Singaporeans are going into debt to invest in property or buy more expensive houses than they can afford.
MAS said that "it is clear that unusually low global interest rates have stimulated credit growth and an increase in property prices in recent years, in Singapore and some other economies that had recovered from the global crisis. That is why the government and MAS have taken decisive steps to cool property demand and prevent excessive leverage."
It also noted that the property market is now stabilising and in fact, private home property prices fell 0.8 per cent in the last quarter of 2013.
New housing loans have also fallen by 35 per cent in the third quarter of 2013 compared with a year earlier.
Secondly, MAS noted that household balance sheets are on the whole strong. For example, the average loan-to-value ratio of outstanding housing loans stands at a healthy 47 per cent as of the third quarter in 2013.
Thirdly, Singapore's financial system is robust. This is among the findings of the recent Financial Sector Assessment Program (FSAP) conducted by the International Monetary Fund.