Chairman's Message

The Singapore economy is in the midst of a sharp contraction. The COVID-19 pandemic still poses a grave threat to lives and livelihoods globally. While unprecedented fiscal, monetary and regulatory policy support will mitigate the economic fallout, output and job losses are inevitable.
The deterioration in external demand and the impact of the domestic circuit breaker measures have resulted in a downgrade of the 2020 GDP growth forecast to -7 to -4%.  

At the same time, inflation in Singapore has remained low, with MAS Core Inflation at 1.0% in 2019. Both MAS Core Inflation and CPI-All Items inflation are expected to turn negative, averaging between -1 to 0% this year. 

MAS’ policy actions in 2020 have been shaped by the unprecedented economic shock globally and in Singapore with the onset of COVID-19.

We shifted to a more accommodative monetary policy stance in March 2020 by setting the policy band for the nominal effective exchange rate on a 0% appreciation path, starting from the prevailing lower level of the exchange rate. The lower starting level was consistent with the downshift in inflation, while keeping the exchange rate on a steady path provides for stability amid the slump in economic activity.

Through our money market operations, MAS has also ensured the stability and functioning of the funding markets.  To provide banks continued access to US Dollar funding, we put in place a US$60 billion US Dollar Facility, on the back of our bilateral swap arrangement with the US Federal Reserve.

We worked with the financial industry to launch a broad range of credit and insurance relief measures to ease the financial strain and cashflow constraints of individuals and small and medium enterprises. MAS introduced a Singapore Dollar Facility to provide very low-cost funding to banks and finance companies, aimed at supporting businesses under the Government’s risk-shared loan schemes. These initiatives complemented the Government’s broader fiscal measures to save jobs, protect livelihoods and help businesses preserve their capabilities. 

We have also stepped up efforts to add vibrance to Singapore’s financial centre, and position the industry for stronger growth as the threat of COVID-19 recedes and economic activity normalises. COVID-19 has accelerated digitalisation, and provided opportunities for the financial sector and FinTech firms to promote digital solutions. MAS launched a $125 million support package to encourage training and deepening of capabilities amid the downtime in business activity, and to spur digitalisation in smaller firms.

MAS announced plans to issue up to two digital full bank licences and three digital wholesale bank licences. This is a significant initiative aimed at enabling non-bank players with strong value propositions and innovative digital business models to offer banking services. There has been strong interest, with 21 applications received from a diverse group of applicants. We are assessing the 14 eligible applicants, and expect to announce the new licences in the later part of 2020.

We are committed to growing green finance in Asia and globally. In November 2019, we announced MAS’ Green Finance Action Plan, which aims to build environmental resilience, develop green markets and solutions, and encourage green FinTech innovation. We are making good progress on all three fronts.

The period ahead will be challenging. MAS’ close partnerships with our stakeholders, both within and beyond the financial industry, will help Singapore to weather the crisis and emerge stronger. I would like to thank all MAS staff for responding swiftly and effectively to the challenges brought about by COVID-19, helping to soften the impact of the economic shock, and ensuring the financial system stayed resilient.


Tharman Shanmugaratnam