Annual Report 2001/2002


Prudential Guidelines for Financial Institutions

GUIDELINES ON PRIVATE EQUITY AND VENTURE CAPITAL INVESTMENTS
After industry consultation, MAS issued guidelines on banks’ private equity and venture capital investments in July 2001 to ensure banks’ prudent management of these investments.

INSURANCE OF RISK MANAGEMENT GUIDELINES
During the year, one major focus of MAS’ work was the compilation and issuance of risk management guidelines. Guide-lines for internal controls, market, credit and liquidity risks are being formalised for issue to banks and insurance companies in the second half of 2002. These guidelines will include the key principles for sound risk management which financial institutions are encouraged to follow, and will help them develop prudent policies and improve their methods for measuring and managing firm-wide risks. Feedback and comments from the industry will be sought and incorporated into the final guidelines.

CREDIT STRESS TESTING
The last decade saw an increase in the number of shocks that financial markets were subjected to. These shocks have also shown a greater tendency to spread to other financial markets, aided by improved financial infrastructure and lower barriers to international capital flows. The anticipation and management of these financial crises are among the most pressing challenges faced by financial institutions.

Stress testing offers financial institutions a systematic methodology to prepare for financial crises. In this regard, MAS released a consultative paper on
31 January 2002 on credit stress testing for industry feedback. This paper aims to provide risk managers with some guidance in constructing and conducting credit stress tests.

SECURITY GUIDELINES FOR MOBILE BANKING AND PAYMENT
Recent advancement and rapid ex-tension of wireless technologies such as SMS, WAP, GPRS and SIM Toolkit have spurred new opportunities and more innovative ways of providing wireless financial and commercial services to customers. As with all new technologies, the need to establish and maintain rigorous standards of security in the operation, delivery and usability of mobile services and applications are key factors in generating consumer confidence and mass-market acceptance. In February 2002, MAS released a consultative paper on security guidelines for mobile banking and payments. This was a result of its collaboration with the financial sector, mobile equipment manufacturers, telcos and service providers in the wireless communications industry. Feedback was sought from financial institutions, network carriers and payment organisations from all over the world. Taking into consideration the comments received, a final paper will be issued later in the year.

[The Financial Sector] [Regulatory Initiatives] [Legislative Changes] [Financial Advisers Act] [Risk-Based Regulation] [Supervisory Initiatives] [Depositor Protection] [Corporate Governance and Disclosure] [Developing The Disclosure Regime] [Prudential Guidelines for Financial Institutions] [Improved Conduct Practices]

[Regulatory Initiatives] [Developmental Initiatives] [Market Infrastructure]

[Table Of Contents]