The MAS has continued to undertake work in the key areas
of monetary policy, surveillance and related research and
economics education. The main thrust of our efforts are to
enhance effectiveness of monetary policy by increasing information
flow to the public and market participants, and providing
them with a better understanding of our thinking and views
on the economy. At the same time, we have also improved on
our surveillance of the external environment and financial
markets and built up the depth and breadth of our analytical
research capabilities.
Enhancing
the Transparency of the Monetary Policy Process
To increase the transparency of the monetary process, MAS
has decided to release a regular Monetary Policy Statement.
The statement, which is released after each review of the
exchange rate policy, aims to enhance public and market participants'
understanding of the thinking behind the policy stance. It
outlines the MAS' assessment of the economic outlook over
the policy horizon and analyses the inflationary dynamics
in the economy.
In July 2000, a policy announcement was made at the time
of the MAS Annual Report press conference.The first formal
Monetary Policy Statement was issued subsequently in February
2001 at the time of the release of the Annual Economic Survey
by the Ministry of Trade and Development.
A paper on Singapore's exchange rate policy framework was
also published in February 2001. It characterised movements
in the exchange rate over the past two decades and discussed
how the monetary policy regime has minimised the disruptive
effects of swings in the currencies of industrialised countries.
The underlying philosophy behind our exchange rate regime
was also explained.
MAS held occasional dialogue and luncheon sessions with professionals
in the private sector and academia during the course of the
year to provide a congenial avenue for the exchange of views.
The MAS Survey of Professional Forecasters saw an increase
in the number of private sector economists and analysts contributing
their forecasts on the Singapore economy.
Economic Surveillance
and Research
To support the analytical framework of monetary policy formulation,
MAS enhanced and expanded the surveillance of both domestic
and external economic developments, and in-depth research
on various economic issues pertinent to the Singapore economy.
Some of the research was published in the Economics Department's
(ED) Quarterly Bulletin (QB). These included a study of the
divergence in economic performance between Northeast and Southeast
Asia, and an assessment of the impact of a US hard landing
on the Singapore economy. There were also articles on the
manufacturing block of equations in the Monetary Model of
Singapore, econometric analysis of Singapore's long-term potential
growth, empirical study of the information content of asset
prices in Singapore, and the introduction of a radar chart
depicting the uncertainty of inflation forecasts. The QB was
also revamped in the first quarter of 2001 to focus on the
outlook for the Singapore economy and enhance public understanding
of the considerations in formulating monetary policy. Hard
copies of the Bulletin were produced for wider distribution,supplementing
the version already posted on the MAS website.
In FY2000/2001, the Financial Markets Report (FMR) was launched
as a supplement to the QB and MAS Monthly Statistical Bulletin
(MSB). The FMR provides a omprehensive and regular review
of developments in domestic and international financial markets,
and examines in greater depth various issues and trends in
international financial markets. Various issues of the reports
have included special features on the interlinkages between
world and regional equity markets, capital market developments
in Singapore and the impact of oil on financial markets in
Asia.
Together, the QB and the FMR provide a comprehensive surveillance
and study of economic developments affecting the Singapore
economy. During the year,the MSB was also revamped to provide
more data on the financial sector, including the disaggregation
of Asian Dollar Market funds by region and details of domestic
bank deposits.
During the year, ED worked closely with other government
ministries and agencies to conduct joint studies on policy
issues. As co-chair of the Economic Monitoring Group with
the Ministry of Trade and Industry, ED advised on the government's
economic forecasts. ED also supported Singapore's active participation
in many international fora and meetings by providing assessments
on a wide range of issues such as the role of financial market
performance in corporate restructuring in the region, capital
controls and prospects for the Euro. Other joint research
projects were established with the Ministry of Finance, the
Urban Redevelopment Authority, and the Ministry of Manpower,
allowing ED to maximise the employment of its econometric
models and research capabilities, while developing a greater
understanding of a broader range of government policy.
We have placed some importance on reaching out to the community
in explaining the role of MAS and facilitating the process
of information exchange and learning. Economics education
initiatives were part of MAS' effort to play a more active
role in raising the standard of economic literacy in Singapore.
Lectures were conducted for 'A' level students and students
from the local tertiary institutions on monetary policy issues.
In addition, the inaugural MAS-ESS essay ompetition was launched
in February 2001. The theme of the essay was "East Asia in
the New Economy: Opportunities and Challenges", and the competition
was open to students and professionals who have an interest
in in-depth analyses of economic issues facing Singapore and
East Asia. ED will ontinue to buttress its efforts at economics
education through the publication of further Economic Explorers
and a new version of the online Economic Literacy Test.