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The international financial community has had an eventful year despite
weakening prospects for the global economy. A slowdown in the US, faltering
recovery in Japan, and moderating growth in Europe and a number of
emerging market economies during the latter half of 2000 threatened Asia's
economic recovery and financial reform initiatives.
The international community nonetheless has continued its reform efforts in the
international financial system, shifting its emphasis from crisis containment
to crisis prevention. Steps taken include strengthening national financial
systems through structural reform; maintaining sound macroeconomic
conditions for strong non-inflationary growth; implementing international
standards and codes; and identifying potential sources of vulnerabilities in the
financial system. Regional groupings have also strengthened peer review
and surveillance, and encouraged co-operative financial programmes.
MAS has ontributed actively to these reform efforts and the ongoing work
in the international arena. Through our participation in regional and
international meetings, we have shared our views and experiences on issues
relating to the international financial architecture and financial supervision.
We also see an increasing need to facilitate closer financial co-operation
with key partners, in areas such as free trade agreements and technical assistance.
During the year, MAS was involved in the work of the Financial Stability Forum
(FSF), which focuses on vulnerabilities in the international financial system
and monitors progress on policy recommendations regarding volatile
capital flows, highly leveraged institutions and offshore financial entres. MAS also
engaged in discussions on conjunctural and structural sources of risks in global
financial markets and is part of the Follow-up Group on Incentives to Foster
the Implementation of Standards.
MAS participated in the Joint Task Force on the Winding Down of Large and
Complex Financial Institutions, a joint initiative of the Basel Committee, the
FSF, the International Organisation of Securities Commissions (IOSCO), and G10
central bank governors and ministers.
In the area of Foreign Exchange Settlement Risk (FXSR), MAS was an active member in the BIS Committee
on Payment and Settlement Systems (CPSS) FXSR sub-group which monitors
developments in the field of foreign exchange settlement. This sub-group
focuses primarily on Continuous Linked Settlement (CLS) and acts as a forum in
which the US Federal Reserve implements the joint regulatory oversight of the CLS
initiative. MAS currently works closely with other central banks in the oversight process.
Strengthening and Implementing International Standards
During the year, the standard-setting bodies continued to look into the
establishment, strengthening, and implementation of standards for the
banking, securities and insurance industries. MAS continued to play an
active role in supporting these efforts. As a member of the Basel Core Principles
Liaison Group (CPLG) and the CPLG Working Group on Capital, MAS is keenly
involved in consultations on the changes in the New Capital Accord. It is also a
regular participant in the meetings of the Basel Committee's Task Force on
Accounting Issues. Last year, the Basel Committee issued various reports
including a report to the G7 Finance Ministers and Central Bank Governors on
its review of a number of International Accounting Standards that have a
significant effect on banks. In February 2001, MAS hosted a meeting of the Task
Force. In addition, Singapore continued to contribute to discussions of the BIS
Working Group on Supervision of Cross-Border Banking. The group issued a paper
on Essential Elements of a Statement of Co-operation between banking
supervisors in May 2001.
In the area of transparency, Singapore was among the first to subscribe to the
IMF's Special Data Dissemination Standards (SDDS) in August 1996. It now
fully meets SDDS specifications for coverage, periodicity and timeliness of
data dissemination, for issuance of advance release calendars, and has
released a reserve template in line with requirements.
MAS will participate in the joint IMF-World Bank Financial Sector Assessment
Programme (FSAP) which assesses the health of national financial systems to
identify financial sector vulnerabilities and to reduce the potential for crisis. In
the context of the FSAP, Singapore will undertake the financial sector modules of
the Reports on Observance of Standards and Codes (ROSCs) which take stock
of a country's progress in observing internationally recognised standards and codes.
In the insurance sector, MAS continues its active participation in the supervisory
standards-setting work of the International Association of Insurance Supervisors
(IAIS). MAS is represented in several IAIS committees, namely, the Executive
Committee, Technical Committee, Insurance Fraud Subcommittee, Investment Subcommittee, Reinsurance
Subcommittee, Solvency Subcommittee, Task Force on Enhanced Disclosure and
Working Group on Observership Issues.
Through its membership at the IAIS, MAS is one of three Asian regulators appointed
to the Joint Forum Working Group on Risk Assessment and Capital which examines
the nature of banking, insurance and securities activities to develop guidance
and principles in the areas of risk assessment, risk management and
capital regulation. It has been specifically tasked to examine the different purposes
of and approaches to capital requirements in the banking, securities and insurance
sectors, and, if appropriate, develop further guidance and principles on capital
standards across the different sectors. MAS has conducted a self-assessment
exercise based on the IAIS' Insurance Core Principles Methodology.
MAS was a member of an international task for e responsible for developing
the Core Principles for Systemically Important Payment Systems. Following
the earlier two drafts issued for public consultation, the final report on the core
principles was released in January 2001 by BIS-CPSS. MAS will examine issues
related to the effective implementation of the core principles and conduct a
preliminary assessment of our Real Time Gross Settlement (RTGS) system.
On the securities side, MAS continues to play an active role in initiatives by the
IOSCO, whose Objectives and Principles of Securities Regulation serve as a best
practice guide for securities regulators worldwide. MAS is a member of IOSCO's
Implementation Committee, whose mandate is to develop implementation
and assessment methodologies for the Objectives and Principles of Securities
Regulation, and to explore the means of offering guidance to international
financial institutions in their use of the Objectives and Principles.
Other IOSCO committees we have participated in include the Technical
Committee's Standing Committee 3 on the regulation of market intermediaries,
and the Internet Task Force, which was reconstituted to evaluate the impact of
recent developments in the use of Internet on securities market and to
identify regulatory issues that warrant further guidance.
In an effort to encourage sound corporate governance in the region, the Third Asian
Roundtable on Corporate Governance and the APEC Corporate Governance Policy
Dialogue were held back-to-back in Singapore in April 2001. MAS, SGX
and the Singapore Institute of Directors co-hosted the Roundtable. The APEC
Policy Dialogue was co-chaired by Singapore, New Zealand and Mexico. This
dialogue addressed government action and incentives needed to foster sound
corporate governance. The findings and recommendations of the policy dialogue
will be reported to APEC Finance Ministers in September 2001.
Central Bank and Finance Fora
In central bank and finance fora, MAS continued its active involvement
in the Executives Meeting of East Asia-Pacific Central Banks (EMEAP), Manila
Framework Group (MFG) Meeting, ASEAN, Asia-Europe Meeting (ASEM),
APEC, South East Asia Central Banks (SEACEN) and the Four Markets Meeting.
These fora focused on the surveillance of regional economic and financial market
developments, banking and corporate restructuring, strengthening of financial
systems, as well as regional financial co-operation and capital market integration.
In the ASEAN Finance Process, Singapore shepherds initiatives to develop the
ASEAN capital markets and co-leads the initiative on Strengthening Transparency
and Governance. With regard to capital markets development within ASEAN,
Singapore leads the following initiatives: development of bond markets; promotion
of securitisation; facilitation of clearing and settlement systems; improvement
of corporate governance, transparency and disclosure; facilitation of cross
border capital flows and investments; co-ordination of supervision and programmes
to strengthen capital markets; the adoption and implementation of internationally
accepted practices and standards; and establishment of minimum standards
for listing rules, procedures and requirements. Singapore also hosted a
workshop on bond market and asset-backed securitisation developments in
ASEAN in April 2000. The workshop examined debt market development in
ASEAN and explored ways to promote capital markets.
The year has seen ASEAN and three partners, Japan, China and South Korea
(ASEAN+3), strengthening co-operation in financing arrangements aimed at
addressing balance of payments difficulties. In May 2000, the ASEAN+3
Finance Ministers announced the Chiang Mai Initiative. This Initiative comprises
an expansion of the ASEAN Swap Arrangement (ASA) from the original
five ASEAN members to include all ASEAN countries, as well as providing
for the establishment of a network of bilateral swap and repurchase
agreement facilities among the ASEAN+3 countries. In November 2000, the ASEAN
central banks, including MAS, confirmed the expansion of the ASA through
a Memorandum of Understanding, increasing the amount of the facility from
US$200 million to US$1 billion.
MAS maintained its active presence in the three EMEAP Working Groups
on Payment and Settlement Systems (WGPSS), Banking Supervision and
Financial Markets. The EMEAP WGPSS addresses payments-related issues
in the East Asia and Pacific region. In 2000, MAS conducted a FXSR
survey in Singapore and participated in the EMEAP Experts Programme
to study FXSR reduction and analyse various Payment-versus-Payment
models. MAS will host the joint BIS G10 Committee on Gold and Foreign
Exchange-EMEAP Forum on Foreign Exchange Markets in July 2001. The
working group on Banking Supervision conducts discussions on supervisory
developments in member countries including the performance of their
domestic banks, progress of banking sector reforms and developments in
new international regulatory standards.
In the APEC Finance Ministers Process, Singapore supported initiatives to
strengthen regional financial markets and promote free and stable capital
flows. MAS officials were also invited to speak at the APEC e-finance forum and
the APEC financial regulators training programme.
Under the ASEM Finance Process, Singapore is participating in the Kobe
Research Project to study financial and capital markets integration. MAS
has also been active in surveillance discussions among the ASEM member
countries, and the ASEM anti-money laundering initiative.
Beginning March 2001, MAS participated in a six-month long SEACEN research
project on payment and settlement systems. The research project will provide
recommendations on improving the payment and settlement systems' safety
and efficiency. MAS is also a member of the SEACEN Experts Group on Capital
Flows. In June 2001, MAS hosted the 36th SEACEN Governors' Conference and
the 20th Meeting of the SEACEN Board of Governors.
Free Trade Agreements
In Singapore's efforts to forge free trade agreements with key trading partners,
MAS was involved in discussions on financial services sector liberalisation and
co-operation. The Agreement between New Zealand and Singapore on a Closer
Economic Partnership (ANZSCEP) was signed in November 2000. Negotiations
with Australia, Canada, European Free Trade Association (EFTA), Japan, Mexico
and the US are underway.
MAS is also involved in financial liberalisation under the ASEAN
Framework Agreement on Services (AFAS) which aims to achieve full
liberalisation of trade in services by the year 2020.
Anti-Money Laundering Initiatives
Global efforts to address financial crimes have intensified in recent years,
triggered by growing concerns that the internationalisation of trade and
finance and advancements in IT may facilitate money laundering.
As an active member of the international financial community, MAS is supportive
of such initiatives to combat money laundering. MAS is represented in both
the Financial Action Task Force (FATF) – an inter-governmental body whose
purpose is to develop and promote policies to combat money laundering –
and the Asia-Pacific Group (APG) on Money Laundering which seeks to ensure
the adoption and implementation within the Asia-Pacific region of
internationally accepted anti-money laundering standards as set out in the
FATF 40 Recommendations. Singapore will host an APG Typologies workshop
on money laundering in October 2001.
Technical Co-operation
Technical co-operation contributes to international financial system stability.
Through the sharing of information and experiences, MAS hopes to assist
countries in enhancing their financial infrastructure and supervisory regimes.
The International Monetary Fund (IMF) - Singapore Regional Training Institute (STI)
is integral to MAS' technical co-operation effort. This joint training initiative of the
Singapore government and the IMF provides courses in macroeconomic and
financial policies to officials from the Asia Pacific region. As of April 2001, the STI has
conducted 48 courses and seminars for close to 1500 participants from 36
countries' monetary authorities, finance ministries, bank supervisory authorities
and statistical agencies.
In addition, MAS organised briefings and
training programmes for regional central bank officials. Further training and
attachment programmes for bank examiners from the People's Bank of
China and from Bank Indonesia were conducted in 2001. MAS will continue to
host central bank visitors from around the globe.
Forty-one course participants6 attended
the 36th SEACEN Banking Supervision Course in October 2000. MAS hosted and
provided resource persons for course modules on financial system stability,
corporate governance and accounting disclosure, and supervisory concerns in
an IT environment.
In the area of insurance regulators' training, MAS is the nominated IAIS
Regional Training Co-ordinator for Asia for the next five years. In April 2001,
we organised the first "IAIS Insurance Supervisory Seminar for Asian Directors"
in Singapore. The Singapore and Japanese Governments sponsored this seminar under the "Japan-Singapore
Partnership Programme for the 21st Century". The well-received Seminar,
of which 24 participants from 13 jurisdictions attended, aimed to both
equip the Asian regulators with the IAIS Insurance Core Principles, and
build communication networks among regulators. MAS will continue to organise
relevant seminars to enhance its role and participation as a training facilitator
for the Asian region.
MAS participates in several taskforce initiatives on economic co-operation,
including the Singapore Ministry of Foreign Affairs-led fact-finding
mission to East Timor (formed under the invitation of the United Nations
Transitional Administration in East Timor); the Singapore-Dubai Joint
Committee; and the India-Singapore Taskforce on Economic Co-operation.
Bilateral Dialogues with Regional Central Banks
MAS maintained its regular bilateral dialogues with regional central banks,
including Bank of Thailand, Bank Indonesia and the Hong Kong Monetary
Authority, during the year. These sessions are effective platforms to foster better
understanding of developments in our respective economies and financial
systems,and discuss issues of mutual concern.
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