Key Supervisory and Regulatory Initiatives

RISK-BASED REGULATORY REGIME

Implementing Basel II
The Basel Committee on Banking Supervision finalised the New Basel Capital Framework (commonly known as Basel II) in June 2004. MAS believes that implementing Basel II will encourage Singapore banks to continually improve their risk management practices. This in turn will contribute to a safe and sound financial system. To that end, MAS has been working with the banks to implement the Basel II proposals for implementation in Singapore in tandem with the G10 countries.

Following public consultation, MAS issued in January 2005 a set of guidelines for banks adopting the internal ratings-based approach to credit risk. MAS will be issuing further guidance on other aspects of Basel II in the second half of 2005. To facilitate the cross-border implementation of Basel II by Singapore-incorporated banks as well as foreign banks operating in Singapore, MAS has been holding discussions with foreign banking supervisors with a view to fostering supervisory coordination and practical home-host arrangements in implementing Basel II.