MAS' Addendum to President's address: Ensuring economic stability and strengthening the financial industry in uncertain times

MAS will actively promote innovations in finance to take advantage of technological changes.
MAS will actively promote innovations in finance to take advantage of technological changes. PHOTO: REUTERS

SINGAPORE - The Monetary Authority of Singapore (MAS) will ensure economic and financial stability during the upcoming period of uncertainty, it said on Tuesday (Jan 19).

The Singapore economy is experiencing modest growth as the global economic outlook is uneven and the domestic economy restructures.

The global system faces new risks such as divergence in monetary policies in the advanced economies, volatile capital flows, and financial vulnerabilities in some emerging economies.

Meanwhile, technological changes pose both challenges and opportunities for the finance industry.

MAS will actively promote innovations in finance to take advantage of these changes, it said in its addendum to President Tony Tan Keng Yam's address to Parliament last Friday (Jan 15).

The President's address outlined the Government's programmes for the next five years and beyond.

Monetary policy will be geared towards maintaining price stability, as cost pressures are still significant, MAS said.

It will also work with the industry to develop deepen capital markets and markets for other financial products while safeguarding consumers' interests.

Here's a look at its plans:


Promoting economic stability

* MAS will continue to focus on minimising economic volatility and ensuring price stability. Since 2010, it has adhered to a monetary policy of gradual inflation of the Singapore dollar. Last year, appreciation was calibrated as inflation eased.

Ensuring a robust and resilient financial sector

* MAS is reviewing the capital framework for insurance companies to make it more risk-sensitive

* It is also collaborating with the industry and other public agencies to strengthen the cyber resilience of the financial sector

* To strengthen Singapore's securities markets, MAS and the Singapore Exchange (SGX) are working to implement reforms such as a minimum trading price for shares, short position reporting, and collateralised trading

* To make over-the-counter (OTC) derivatives markets safer, MAS will implement central clearing and reporting of trades as appropriate

* MAS is reviewing the use of a complexity-risk ratings framework for investment products, to facilitate sound financial decision making

Fostering a dynamic financial centre

* MAS will collaborate with the industry to make swift, simple and secure digital payments available to all

* It will encourage financial institutions to set up innovation laboratories here to test-bed solutions, and provide a conducive regulatory environment for such innovation

* MAS has also committed $225 million over the next five years to support initiatives under the Financial Sector Technology and Innovation scheme

* MAS will work actively with the industry to maximise the potential of technology, and will make full use of SkillsFuture to deepen skills, at all levels of the financial sector workforce

* It will also ensure a strong Singapore core in the financial sector by working with financial institutions to provide Singaporeans with more opportunities to gain exposure, and to develop industry leaders