November 23, 2018

MAS published the results of its financial stability review for 2018. The intention of the review is to contribute to a better understanding of issues affecting Singapore’s financial system among market participants, analysts, and the public. The report on financial stability review offers an analysis of the financial sector in Singapore, also focusing on risks in the external environment and reviewing the corporate and household sectors.

MAS conducts regular assessments of the financial system in Singapore, which includes identification of the potential risks and vulnerabilities and a review of the ability of the financial system to withstand potential shocks. The following are the key highlights of the review:

  • Risks to global financial stability have increased, amid tighter financial conditions and trade tensions. Tightening global financial conditions have caused capital outflows from the region and could create further pressures on regional currencies and the debt-servicing abilities of sovereigns, corporates, and households.
  • The country's banking system, corporate sector, and household fundamentals remain resilient. The banking system remains resilient, despite increased uncertainty. MAS assesses that domestic credit growth remains in line with the economic conditions and does not observe any broad-based domestic credit overheating at this juncture. Hence, MAS will maintain the countercyclical capital buffer (CCyB) at 0%.
  • Looking ahead, corporates, banks, and households in Singapore need to guard against rising headwinds. The latest stress tests of MAS across the banking, corporate, and household sectors indicate that the overall system is resilient. Nonetheless, continued vigilance is warranted, as the likelihood of external shocks from tighter financial conditions and of materialization of trade tensions has increased, which, in turn, raises the risks to financial stability.

Keywords: Asia Pacific, Singapore, Banking, Insurance, Securities, CCyB, Stress Testing, Financial Stability Review, MAS

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