|In July 2001, MAS published a report, based on a survey of the Singapore banking industry that highlighted significant exposures in current foreign exchange settlement practices. This report also underscored the market participants demand for foreign ex-change settlement risk reduction measures, principally the new Continuous Linked Settlement (CLS), a global initiative that would enable two legs of a cross-currency transaction to be settled simultaneously.
CLS is targeted to go live in 2002 and will initially settle foreign exchange transactions in seven of the most actively traded currencies. On 18 October 2001, MAS received in-principle agreement from CLS Bank to include the Singapore dollar as a prospective CLS eligible currency in 2003.
The three major Singapore banks - Development Bank of Singapore (DBS), Oversea-Chinese Banking Corporation Limited (OCBC) and United Overseas Bank (UOB) - became share-holders of the CLS Group in October 2001. They have also jointly formed Clearing and Payment Services (CAPS), a common utility that will facilitate the connection of banks systems to CLS. The successful co-operation in the area of payments processing will increase the efficiency and consolidation in banks back office processing that is important to Singapores competitiveness.