Singapore: Financial System Stability Assessment

Publication Date: November 14, 2013
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Summary: EXECUTIVE SUMMARY The Singapore financial system is highly developed, and well regulated and supervised. Singapore is one of the world’s largest financial centers, built around a core of domestic and international banks, and also offers a wide range of non-bank services. The authorities have given strong emphasis to integrity and stability in finance and to compliance with international standards, and have addressed most recommendations made by the 2004 FSAP. Singapore’s current regulation and supervision are among the best globally. The Monetary Authority of Singapore (MAS) oversees the entire financial system, and has the analytical and operational capabilities to do so effectively. Singapore is exposed to a broad array of domestic and global risks, especially in light of its interconnectedness with other financial centers. The most pressing vulnerability appears to stem from the rapid growth of credit and real estate prices in recent years, but the financial system is also exposed to possible spillovers from a future tightening of U.S. monetary policy, an economic slowdown in China, or a deterioration of economic conditions in Europe. The team’s stress tests suggest that these risks are manageable. This reflects banks’ large capital and other cushions, and the decisive macroprudential actions taken by MAS to address the threat of a bubble in the housing sector. Moreover, MAS has sought to address potential spillovers from other major financial centers by converting large retail branches operating in the domestic market into domestically incorporated subsidiaries, and by pressing in international fora for greater sharing of supervisory information on global systemically important financial institutions (G-SIFIs). Looking forward, the analysis suggests the importance of continuing to monitor closely cross-border interbank liabilities, and also of continuing to adjust macroprudential measures in response to domestic housing market conditions.
Series: Country Report No. 13/325
Subject(s): Financial system stability assessment | Financial sector | Banks | Credit risk | Bank supervision | Insurance | Stress testing | Capital markets | Macroprudential Policy | Singapore

Publication Date: November 14, 2013
ISBN/ISSN: 9781475513431/2227-8907 Format: Paper
Stock No: 1SGPEA2013001 Pages: 69
US$18.00 (Academic Rate:
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