Published Date: 03 November 2021

"MAS Golden Jubilee Conference" - Welcome Remarks by Mr Ravi Menon, Managing Director, Monetary Authority of Singapore, at MAS Golden Jubilee Conference on 3 November 2021

Distinguished guests, ladies and gentlemen, good morning.

Thank you for joining us today as we commemorate the 50th year of the Monetary Authority of Singapore with this Golden Jubilee Conference.

MAS has come a long way since 1971.  It began with narrow functions.  Its very name as a monetary authority reflected the fact that currency issuance was outside its domain, under the prevailing currency board system.  Since then, it has grown in scope and size.  MAS is now a full-fledged central bank, conducting monetary policy, issuing currency, overseeing the payment system, and managing the official foreign reserves. It is also an integrated financial supervisor: a prudential regulator of the banking and insurance industries, and a securities commissioner responsible for the capital markets.  As if these functions are not enough, MAS is also responsible for the growth and development of Singapore’s financial sector: promoting jobs and skills, innovation and technology, and sustainability.

By most accounts, MAS has not done badly.  Singapore has enjoyed steady growth with price stability; CPI inflation has averaged 2.7% over the last 50 years; 1.4% over the last 25.  The official foreign reserves stand at more than US$400 billion, one of the largest in the world, and managed across a well-diversified portfolio of assets including equities, sovereign and corporate bonds.  Singapore has maintained financial stability, with no systemic failures or crisis of confidence, despite having gone through numerous episodes of economic and financial turbulence. Singapore is also one of the leading international financial centres in the world today, with global prominence in offshore banking, treasury and derivatives activities, asset and wealth management, and specialty insurance and reinsurance. 

MAS has achieved what it has with a judicious blend of orthodoxy and unconventionality. Speaking at our 50th Anniversary Partners Appreciation Evening two weeks ago, Singapore’s Prime Minister Lee Hsien Loong attributed MAS’ success to what he termed its “combination of caution and creativity”. Or as our Chairman, Tharman Shanmugaratnam, puts it, “coupling prudence with innovation”.  In monetary policy, MAS adhered to traditional principles of central banking centred on ensuring price stability while creatively adapting policy frameworks to suit Singapore’s context by choosing to manage the exchange rate rather than interest rates or money supply.  With respect to the financial sector, MAS set high regulatory and supervisory standards, while taking a facilitative and risk proportionate approach. It ensured financial stability, while promoting innovation and market development.

MAS has done well also because of the strong partnerships it has enjoyed … with government agencies in Singapore; the financial industry here and abroad; local and international academia; and our counterparts in the global central banking and regulatory communities.  Many of you are here with us today, and we thank you for being part of our journey. 

A milestone anniversary is not only an occasion to reminisce past achievements but to also ponder the future.  The world of central banking and financial regulation is in a state of flux, with new circumstances, new expectations, new technologies, new challenges.  Central banks and financial regulators cannot confine themselves to erstwhile thinking, conventional wisdom, and traditional ways of doing things just because these have served us well before.  We must be willing to re-evaluate our past assumptions, draw lessons from crises and failures, apply new knowledge and insights, and continually adapt while remaining true to our mandate of providing stability amid change. 

This Jubilee Conference is MAS’ little contribution towards thinking about that future.

In monetary policy, structural trends and economic shocks have prompted central banks to take on broader mandates, expanded tools, and evolving targets.  What is the future of inflation targeting in a world of digitalisation, aging populations, secular decline in real interest rates, and excess demand for safe assets? Will quantitative easing and negative interest rates – perhaps enabled by central bank digital currencies – become standard features of the new monetary policy toolkit?  Should monetary policy take account of its consequences for financial stability, debt accumulation, and income inequality?

In financial regulation, risks to financial stability are increasingly shifting to outside the regulated financial system.  How do we deal with financial intermediation that is being driven by non-bank financial institutions which may pose significant liquidity and leverage risks?  What does it mean for financial regulation with non-financial players such as FinTech and BigTech firms providing a range of financial services, often outside the regulatory perimeter?  Will digital money in the form of cryptocurrencies and stablecoins disrupt traditional bank intermediation and payment systems, with adverse effects on financial stability?

The future of central banking and financial regulation could be even more challenging for emerging market economies.  Faced with large and volatile international flows of capital, central bankers in many of these economies have had to resort to a variety of policy tools besides traditional monetary policy to achieve both macro-economic and macro-financial stability.  Asian central banks faced with the risk of financial instability have had to resort to a variety of tools – such as foreign exchange intervention, macroprudential policies, and capital flow management measures.  What are the prospects for an integrated policy framework that provides coherence not only across these various policy tools but also with traditional monetary and fiscal policies? 

It is our hope that the MAS Golden Jubilee Conference will shed light on these and other seminal issues that will occupy central bankers and financial regulators.  In this effort, we are privileged to have a distinguished group of academics and policymakers come together to share their knowledge and practical experiences.  I thank all our speakers, panelists, and participants for being here with us for this Golden Jubilee Conference. 

I wish everyone a fruitful and enriching experience.