MAS Publishes Its Approach to Macro-Prudential Policy

The MAS framework for macro-prudential policy involves the iterative processes of surveillance and risk identification, impact and vulnerability assessment, and policy response. If the MAS surveillance and impact assessments identify a material systemic risk that could impact the financial system or the real economy adversely, MAS will take policy action to remove or mitigate the risk, or build resilience against it. The macro-prudential policy approach of MAS can be characterized as pre-emptive, targeted, calibrated, and multi-pronged. In its approach, MAS also lists the policy tools, along with the particular systemic risk they assess. MAS takes a system-wide perspective in its macro-prudential surveillance efforts. It constantly monitors a broad suite of indicators to identify potential risks and how they may manifest. These indicators cover five broad sectors: banks, non-bank financial institutions, corporates, households, and the external sector. Linkages within and between these sectors are identified through network analyses of balance sheet variables and transaction flow data.

Keywords: Asia Pacific, Singapore, Banking, Macro-prudential Policy, Systemic Risk, CCyB, LTV, MAS