Singapore: Financial Sector Assessment Program; Technical Note-Financial Stability Analysis and Stress Testing
IMF Staff Country Reports, July 15, 2019
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- Singapore: Financial Sector Assessment Program; Technical Note-Financial Stability Analysis and Stress Testing
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Bibliographic details
- Published: July 15, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498325868.002
Overview
- Purpose: Contributes to the assessment of the stability and soundness of the financial sector in Singapore through a comprehensive set of risk analyses.
- Approach: Combines examination of key risk indicators with detailed stress tests simulating the health of banks, insurers, nonfinancial corporates, and households under severe yet plausible (counterfactual) adverse scenarios.
Scenarios and Analytical Scope
- Scenarios included:
- Global financial market turmoil
- A major slowdown of economic activity in China
- Cyber-attacks
- Extreme flooding
- Contagion analyses:
- Simulations of contagion within the international banking network
- Contagion within the domestic banking system
- Contagion between different types of financial institutions in the financial system
Key Findings
- Systemic resilience:
- The stress tests reveal that the financial system is broadly resilient to severe adverse shocks.
- Key vulnerability:
- Foreign exchange liquidity is identified as a key vulnerability.
Policy Recommendations
- Strengthen surveillance:
- Monetary Authority of Singapore should continue strengthening its surveillance by closing data gaps and developing its analytical tools.
- Data collection priorities:
- Further data collection on domestic interlinkages
- Household mortgage debt at the borrower level
- Insurers’ balance sheets
Subject Coverage and Keywords
- Subject areas: Banking; Capital adequacy requirements; Domestic systemically important banks; Financial institutions; Financial regulation and supervision; Financial sector policy and analysis; Insurance companies; Solvency stress testing; Stress testing
- Keywords include: Asia and Pacific, banking group, Capital adequacy requirements, CR, credit risk, Domestic systemically important banks, financial market, financial system, Global, Insurance companies, ISCR, sensitivity analysis, Solvency stress testing, solvency stress tests, Stress testing, stress tests, U.S. dollar, yield curve
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- 1sgpea2019005