Singapore's banking system and financial sector are in safe hands and able to weather the shocks of even such tumultuous events as Brexit, says Minister for Trade and Industry (Trade) Lim Hng Kiang.
Mr Lim told an Association of Banks in Singapore (ABS) event yesterday that the Monetary Authority of Singapore (MAS) works closely with financial institutions to ensure a "continued resilience".
"The MAS has been prepared for this possible (Brexit) outcome, and had taken precautionary measures, including keeping in close contact over the past weeks with banks in Singapore, foreign central banks and regulators.
"Our markets continue to function in an orderly manner and our financial system remains sound."
ABS chairman Wee Ee Cheong said at the event that it is too early to determine the wider impact of Brexit, adding: "But we believe Asia is in a better shape to handle such shocks compared with the previous crises in 1998 and 2008."
Mr Wee, who is chief executive of United Overseas Bank, noted that the immediate financial impact of Brexit is on foreign exchange, adding that "we have to watch market developments closely".
Other topics Mr Lim addressed at the 43rd annual dinner of the ABS included the tough interest rate environment, the economic slowdown worldwide and the regulator's efforts to strengthen the banking system and enhance security.
The minister noted the "periodic bouts of heightened volatility in financial markets over the past few years".
He also said the "new normal of low-growth, low-interest rate environment globally" and market volatility amid a build-up in debt mean that banks have to continually update their risk management capabilities.
This is why the MAS' annual industry-wide stress test of key financial institutions in Singapore is important, said Mr Lim.
The minister added that about 80 financial sector firms are involved, up from "less than a handful of banks and a few test parameters" in 2002, when the exercise began.
He pointed out that the total capital adequacy ratios of local banks and foreign bank subsidiaries are "north of 15 per cent", compared with MAS' regulatory requirement of 10 per cent.
Mr Lim also said MAS has been working with ABS regarding cyber security and resilience, through the ABS standing committee on cyber security, for instance.
His remarks come on the back of recent cyber attacks on financial institutions around Asia, which prompted MAS to stress the need for high levels of IT security last month.
Amid all this, banks have to stay alert, stressed Mr Lim, who added that he expects a "tougher macro-economic environment and growing complexity of operational and technology risks" to place greater demand on their risk management and compliance systems.
"Even as banks continue to upgrade their systems and processes to strengthen their risk resilience, it is equally important that banks regularly test the robustness of their contingency plans and capability to manage tail risk events," he said.
