On 29 June 2001, MAS announced the second phase of a five-year (1999-2003) programme to liberalise foreign banks access to the domestic market. Details of the second-phase liberalisation include:
(a) Broadening of access to the domestic wholesale banking market: Restricted Banks were renamed Wholesale Banks, to better reflect the wide range of activities that they currently engage in. Fifteen banks were awarded wholesale banking privileges in December 2001. Another five Wholesale Bank licences will be made available in 2002. MAS will progressively upgrade all Offshore Banks and Qualifying Offshore Banks to Wholesale Banks over time.
(b) Enhancement of competition in the domestic retail banking market:
MAS awarded two new Qualifying Full Bank (QFB) licences in December 2001 to The Hongkong and Shanghai Banking Corporation Limited and Malayan Banking Berhad, bringing the total number of QFBs to six. All six QFBs were granted enhanced privileges in branching and establishing off-site Automated Teller Machines (ATMs), and new privileges in offering the Central Provident Fund Investment Scheme products, operating Supplementary Retirement Scheme accounts, and providing Electronic Funds Transfer at Point of Sale services.
MAS completed another review of its policy on the non-internationalisation of the Singapore dollar in March 2002. Areas were identified for further liberalisation in order to facilitate continued growth of Singapores capital markets. These included exempting all individuals and non-financial entities not substantially engaged in financial trading and investment activities from the restrictions of the policy.
For non-resident financial entities, the following financial activities have been liberalised:
(a) Assets swaps, cross-currency swaps and cross-currency repos can be transacted freely;
(b) Banks may lend any amount of Singapore dollar-denominated securities to non-resident financial entities, in exchange for both Singapore dollar-or foreign currency-denominated collateral;
(c) Singapore dollar foreign exchange options can be transacted freely;
(d) Banks may lend Singapore dollar to non-resident financial entities for investment in financial assets and real estate without having to ensure that the Singapore dollar credit facilities are withdrawn when the investments, or part thereof, are liquidated. These measures would facilitate greater participation by non-residents in the Singapore dollar capital markets.
Over the last few years, MAS has progressively lifted restrictions on Singapore dollar lending to foreigners which are not critical for stability reasons. As part of a comprehensive review of land and property related measures, the above restrictions on non-citizens borrowing in Singapore dollar to purchase property were lifted in October 2001.