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| RISK-BASED REGULATORY REGIME |
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| Risk-based Capital for Insurers
and Banks |
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MAS worked on a risk-based capital
(RBC) framework for insurance companies in close consultation
with insurance practitioners and the actuarial and accounting
professions. The RBC framework, which is near completion, focuses
on the determination of risksensitive capital requirements for
insurance companies and the valuation of assets and liabilities
using a realistic basis.
Last year, we also amended the Insurance Act (IA) on provisions
necessary to implement the RBC framework. Proposed regulations,
notices and guidelines on the new valuation basis and capital
requirements were released for public consultation in November
2003. In addition, further testing of the framework was conducted
in early 2004.
The final Insurance (Valuation and Capital) Regulations, Insurance
(Accounts and Statements) Regulations, Insurance (Actuaries)
Regulations, Notice on the Valuation of Policy Liabilities of
Life Business, and Guidelines on the Valuation of Policy Liabilities
of General Business are targeted for issue in the latter part
of 2004.
In May 2004, MAS issued details of changes to the capital adequacy
requirements for Singapore-incorporated banks under the Current
Accord. From 30 June 2004, MAS will lower Tier One capital adequacy
ratio (CAR) requirement from 8% to 7%, and the total CAR requirement
from 12% to 10%. In addition, MAS will also adjust the rules
for computing CAR.
The Basel Committee on Banking Supervision finalised the New
Basel Capital Framework (New Framework) in end June 2004. MAS
intends to adopt the New Framework in tandem with the G10 countries.
We will continue to work closely with the Singapore-incorporated
banks to assess the impact of the New Framework and determine
how best to adapt the proposals for Singapore. |
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| During the year, MAS consolidated,
streamlined and fine-tuned our regulations to ensure that Singapore’s
financial system remains dynamic and relevant in a fast-paced
environment. We worked closely with industry, listened to them
and sought solutions to their needs. We issued 19 consultation
papers in the last financial year. The feedback provided MAS
the industry perspective on the proposed changes. |
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