Over the past year, the world economy has gradually emerged from its worst recession in the post-war era, with Asia leading the recovery. The resumption of growth was helped by the timely implementation of supportive fiscal and monetary measures around the world. As a result, the global economy is now on a firmer footing, in contrast to a year ago. Still, risks remain on the horizon, particularly with sovereign debt problems emerging from some Eurozone economies. Heightened vigilance is essential in this volatile environment, where economies and financial markets are deeply integrated.

Alongside improving global economic conditions, the Singapore economy has recovered strongly from the recession of 2009. For the rest of 2010, economic activity should continue to be sustained at high levels, supported by growth from a broad range of industries.

Against the backdrop of rapid growth and recovering prices in Asia, some regional governments and central banks have begun to unwind macroeconomic policy supports implemented earlier. In Singapore, MAS shifted to a modest and gradual appreciation of the exchange rate policy band, in addition to an upward re-centering of the band in April 2010. This adjustment to the monetary policy stance will contribute to medium-term price stability in the economy.

Singapore has weathered the financial crisis relatively well. The crisis has, however, greatly altered the global financial landscape. To stay ahead, it is important that we adapt to these changes to ensure that our financial system remains competitive and strong.

MAS has been actively participating and contributing to the ongoing discussions on regulatory reforms at various international fora aimed at promoting long term global financial stability. In addition to finalising the enhancements to the Basel II capital framework in July 2009, the Basel Committee on Banking Supervision (BCBS) proposed a comprehensive consultative package in December 2009 to strengthen global capital and liquidity standards so as to promote a more resilient banking sector. Complementing this are discussions at the Financial Stability Board (FSB) to develop a policy framework for reducing the moral hazard risks posed by systemically important financial institutions. MAS is a member of both the BCBS and FSB, and will work with the industry to implement these new standards when they are finalised.

An important aspect of financial stability is the critical role played by the Board and Senior Management in overseeing their financial institutions. MAS has proposed enhancements to the existing corporate governance framework for locallyincorporated banks, financial holding companies and direct insurers. The measures seek to enhance independence of the Board, strengthen Board oversight on risk management, and ensure that directors are equipped with appropriate skills and are able to commit enough time to oversee the operations of financial institutions.

MAS also expects the Board and Senior Management of financial institutions to be responsible for setting their corporate culture and direction to align business practices with fair dealing outcomes. In March 2009, MAS issued a consultation paper on the sale and marketing of unlisted investment products. In January 2010, MAS issued revised proposals that apply to both listed and unlisted investment products. Among the revised proposals, financial advisers will need to assess a retail customer’s investment knowledge or experience before selling investment products to the customer. These proposals aim to enhance the safeguards for retail consumers.

Singapore’s financial services sector has remained resilient throughout the crisis, reflecting our strong fundamentals. The continued rise of Asia will drive increasing trade in goods and services, as well as the flow of capital and ideas within the region and with the rest of the world. As a well-connected global city in the heart of Asia, we are well-positioned to facilitate these flows. MAS will continue to encourage and support the development of Singapore as a key international financial centre.

The global economic and financial landscape will continue to grow in complexity. To be better equipped to deal with these challenges, MAS announced a new organisation structure in March 2010. The new structure will enhance MAS' ability to maintain monetary and financial stability, contribute to global cooperation, and better serve the public. It will also enhance our ability to steer our financial sector to support Singapore's growth as a Global-Asia business and financial services hub.

Professor Walter Woon stepped down from the MAS Board on 31 May 2010. He had served on the Board since 20 May 2008. I thank him for his contributions to MAS. I also welcome Mr Peter Ong, who joined the Board on 22 October 2009.

Who We Are
MAS is the central bank of Singapore. Our mission is to promote sustained non-inflationary economic growth, and a sound and progressive financial centre.
MAS’ Functions
To act as the central bank of Singapore, including the conduct of monetary policy, the issuance of currency, the oversight of payment systems and serving as banker to and financial agent of the Government;
To conduct integrated supervision of financial services and financial stability surveillance;
To manage the official foreign reserves of Singapore; and
To develop Singapore as an international financial centre.
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