Media Releases
Published Date: 27 April 2004

Singapore's Robust Financial System Gets Strong Endorsement from IMF

Singapore's Robust Financial System Gets Strong Endorsement from IMF

Singapore, 27 April 2004...The International Monetary Fund (IMF) has affirmed the robustness of Singapore's financial system and the soundness of Singapore's legal, supervisory and institutional framework. The Financial System Stability Assessment (FSSA1 ) report published today highlights that Singapore's financial sector is resilient and robust and commends Singapore's high degree of observance of international standards and codes.


The IMF, in its assessment, notes that:

(i) 

Singapore's financial sector has proven resilient and remains robust despite a series of economic downturns.

(ii)

The local banks and insurance companies are well-capitalised and profitable.  A good representation of the foreign bank branches were assessed and results show that they are strong, reflecting their good loan quality and their overall financial condition.  Stress test results also indicate that Singapore's systemically important local and foreign banks and insurance companies could withstand  significant shocks.

(iii)

Regulatory and supervisory practices exhibit a high degree of observance of international standards and codes across all segments of the financial sector. Singapore has developed a high level of technical competence and the institutional infrastructure that is necessary to effectively supervise its financial system.

(iv)

Singapore is a major international financial centre that offers a wide range of financial products and services. The financial sector benefits from political stability, a modern infrastructure, highly developed legal and regulatory framework and strong macroeconomic fundamentals.

(v)

Singapore's systemic liquidity is well managed. Singapore also has one of the most developed payment infrastructure in the world. No major vulnerabilities in the system have been identified. 

(vi)

Singapore has in place a sound and comprehensive legal, institutional, policy and supervisory framework for anti money laundering and countering the financing of terrorism.

The Monetary Authority of Singapore (MAS) welcomes the positive assessment of the Singapore financial system. Managing Director of MAS, Mr Koh Yong Guan, said: "The strong endorsement by the IMF affirms Singapore's standing as an international financial centre. It is also testament to MAS' long tradition of sound and prudent regulation and supervision.  The FSAP process was intensive and exhaustive.  We have found it very useful and constructive. We are reviewing the FSAP recommendations in areas that could be further strengthened and will take steps to follow-up on those areas where appropriate."


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Notes

1. The Financial Sector Assessment Programme (FSAP) is a joint initiative by the IMF and World Bank.  It was introduced in May 1999 and aims to strengthen the monitoring of financial systems around the world.  The review consists of three parts : (1) identify the strengths and vulnerabilities of a country's financial system; (2) assess a country's regulatory and supervisory practices and legal framework against international standards;   (3) ascertain the country's  developmental and technical assistance needs and help to prioritise policy responses.

2. The FSAP mission visited Singapore three times in November 2002, July-August 2003, and September 2003. After the completion of the FSAP assessment, the FSAP team compiled the Financial System Stability Assessment (FSSA). The FSSA includes both a report by IMF staff on the stability of the financial system and summary assessments of our observance of Financial Sector Standards and Codes.

3. The Executive Board of the IMF has endorsed the FSSA and it is published today by the IMF. A copy of Singapore's FSSA can be obtained from the IMF website at http://www.imf.org/External/pubs/ft/scr/2004/cr04104.pdf

 

1  The FSSA is based on a comprehensive  review of Singapore's financial system carried out under the Financial Sector Assessment Programme in 2003. It is issued in conjunction with the Article IV Staff Report which contains the IMF's views on the macro-economy. The Article IV consultation is conducted every year but the FSAP is conducted once every seven to 10 years.