MAS seeks to promote and preserve stability in the financial system through high standards of licensing, regulation and supervision. However, we do not aim to prevent the failures of all financial institutions. A "zero-failure" regime is neither feasible nor desirable as it leads to considerable moral hazard for the regulator and places excessive regulatory burden on financial institutions. When dealing with a bank in distress or insolvency, a private sector resolution option is often preferred by regulators. If this is not possible, international experience has shown that quick action by the regulator is important to minimise losses to depositors and other creditors, and to maintain stability in the financial system. With these objectives in mind, MAS has introduced new provisions in the Banking (Amendment) Act 2007 to give ourselves a broader range of resolution options and a wider role in the resolution process of a bank.
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