THE FINANCIAL SECTOR: KEY SUPERVISORY AND REGULATORY INITIATIVES       Content Page Supervision Regulation Risk-based Regulatory Regime Fine-Tuning Regulatory framework Ensuring Sound Market Conduct Innovative Systems for Efficient Payment and Settlement     SUPERVISION   . Enhancing Risk-focused Supervisory Approach . Box 1 – Fostering a Sound and Progressive Financial Services Sector . Enhancing MAS’ Supervisory Capabilities . Box 2 – Stress Testing of Life Insurers . Box 3 – Streamlining Inspection Function . Thematic Inspections to Improve Surveillance   Box 2 STRESS TESTING OF LIFE INSURERS   MAS carried out active stress testing of life insurers in 2003. It was part of our normal surveillance activities to assess the industry’s and companies’ capacity to cope with further declines in equity and fixed income values. The exercise revealed that most companies were well-prepared to deal with equity declines, having put in place adequate contingency plans. With good planning and the pick-up in equity markets, life insurance companies in Singapore are wellcapitalised and generally in good financial health.