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EMERGING FROM THE
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LIQUIDITY
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ENSURING SAFETY
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FINANCIAL SYSTEM
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ENSURING SAFETY AND SOUNDNESS OF FINANCIAL INSTITUTIONS AND FINANCIAL SYSTEM

Prudential Supervision and Surveillance

Over the year, MAS has maintained a heightened level of financial surveillance and has continued to focus on ensuring the safety and soundness of financial institutions in Singapore. Within MAS, regular internal financial stability meetings were convened to assess risks and discuss developments affecting financial stability. From these discussions, policy actions were taken where appropriate.

As part of ongoing supervision, stress testing has been strengthened as a tool to assess the health of financial institutions, identify potential risks to their soundness and enhance their capital planning and management processes. MAS has been conducting regular stress testing with banks and life insurers even before the crisis and the requirements are refined periodically to incorporate evolving best practices. For instance, a more intensive stress testing regime was implemented where requirements for reverse stress testing and integrated stress testing were enhanced for banks. New requirements have been introduced for life insurers to have a “stress-to-failure” scenario and for direct general insurers to conduct annual stress tests.

The crisis has also reinforced the importance of cross-border supervisory cooperation. At the international level, regular supervisory colleges for over 30 systemically important financial institutions with large cross-border operations have been established. As host regulator to many of these financial institutions, MAS’ participation in the number of supervisory colleges has increased since the onset of the crisis.

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