CONTENTS
HOME
OUR WORK - Managing Risks, Sustaining Growth
A MORE CHALLENGING POLICY ENVIRONMENT
MONETARY POLICY - PROVIDING AN ANCHOR FOR PRICE STABILITY OVER THE MEDIUM-TERM
MANAGING THE CHALLENGES OF INCREASED GLOBAL FINANCIAL UNCERTAINTY
A SOUND AND PROGRESSIVE FINANCIAL CENTRE
CURRENCY
 
MANAGING THE CHALLENGES OF INCREASED GLOBAL FINANCIAL UNCERTAINTY 20
 
International Financial Markets: Subprime Crisis 20
 
Asia: Resilient So Far But There Are Risks 23
 
Enhanced Surveillance and Supervision 24
 
Money Markets: Staying Vigilant 24
 
Business Continuity and Crisis Management 25
 
FATF Mutual Evaluation Exercise 2007/2008 26
 
AML/CFT Notice to SVF Holders 26
 
External Validation Performed Between Other Ministries' Internal Audit Departments and MAS 26
 
Box Story 2 - Audit Committee Guidance Committee 27
 
Risk Management Guidelines for Insurance Companies 28
 
Consumer Protection (Fair Trading) Act - Inclusion of Financial Products and Services 28
 
Corporate Governance of Listed Companies 28
 

Money Markets: Staying Vigilant

As events in global money markets unfolded in the second half of 2007, major central banks including the Federal Reserve Bank, the European Central Bank and the Bank of England moved swiftly to alleviate liquidity stresses and reassure markets by injecting liquidity.

Money markets in Asia remained relatively less susceptible to the global tightening in liquidity conditions. Money market participants in Asia were by and large less vulnerable to liquidity stresses as a high rate of savings enabled banks to balance their profile between a stable deposit base and funding from the interbank market. MAS stayed in close contact with key banks, gathering up-to-date feedback of market conditions and sentiment, and ensured credit lines between banks were not strained. MAS heightened monitoring based on the systemic studying of a range of indicators from currency movements to equities indices, changes in the profile of yield curves and forward pricing, so as to anticipate possible developments that might ensue.

To reassure markets, MAS issued a statement in August 2007 to state that we had been monitoring the financial markets closely for potential liquidity bottlenecks, and that while no extraordinary liquidity injections had to be made, MAS stood ready to inject liquidity if necessary.

Chart 8 shows the one-month Singapore Dollar (SGD) Singapore Inter-Bank Offer Rate (SIBOR) and US Dollar (USD) London Interbank Offered Rate (LIBOR) deposit rates during key episodes of funding stress, where interbank interest rates in Singapore remained stable amidst volatility in global money markets. The Singapore Dollar market encountered less turbulence with minimal increases in interest rates in August to September and November to December 2007. This was an encouraging reflection of the confidence market participants had in the Singapore Dollar market, and reflected the absence of significant interbank market squeezes for the period.