ANSWER TO PARLIAMENTARY QUESTION ON: Policy Towards Domestic Banking Sector
For Parliament Sitting on 19 Feb 98
Question To ask the Deputy Prime Minister what is his initial assessment on the recommendations made by the Sub-Committee on Banking and Finance and whether there are plans by the Government to open up the domestic banking sector to competition as part of the overall strategy to strengthen Singapore's financial sector.
Answer: 1. The Government responded yesterday to the report by the Subcommittee on Finance and Banking. It has accepted nearly all the recommendations, except for those involving tax issues, which it will study further.
2. We are studying our policy towards the domestic banking sector as part of our overall review of the financial sector. We have not yet reached any firm conclusions. But whatever our policy, the inevitable trend is towards a more open and competitive business environment. The forces of information technology and globalisation will increasingly breach geographical and regulatory barriers. Worldwide, institutions are merging and restructuring. Traditional barriers between markets and products are breaking down. Competition is intense.
3. Domestic banks are important contributors to the stability of our financial system. We want them to remain strong players as the domestic market becomes more competitive. The Government will support them through this challenging transition, but it is up to the banks to upgrade themselves in order to thrive in this new environment.