Featured Product

    IMF Reports Assess Financial System Stability in Singapore

    July 15, 2019

    IMF published a report presenting results of the Financial System Stability Assessment (FSSA) of Singapore. Additional reports that were published include a staff report under the 2019 Article IV consultation as well as four technical notes and a report on the detailed assessment of observance (DAO) of CPSS-IOSCO principles for financial market infrastructures (FMIs) under the Financial Sector Assessment Program (FSAP). The technical notes cover implications of fintech for regulation and supervision of financial sector; financial stability analysis and stress testing; crisis management and resolution; and developments in macro-prudential policy. MAS published a statement welcoming the positive assessment of financial system in the country, highlighting that it will review the IMF recommendations within the reports and undertake appropriate measures to further strengthen financial oversight.

    The FSSA report highlights that main parts of the financial system appear resilient, even under adverse scenarios. The financial health of major banks in Singapore—particularly their sizable capital buffers and strong profitability—allows them to absorb the sharp increase in credit losses in severe but plausible scenarios of the solvency stress tests of FSAP. Similarly, insurance companies have strong capital positions, though stress tests point to vulnerabilities in parts of the sector. However, banks’ overall liquidity position is mixed—domestic currency liquidity is comfortable, but U.S. dollar liquidity is vulnerable to stress conditions. Banks prudently rely mostly on deposits for funding. Results of the FSAP cash-flow stress tests confirm the vulnerability in U.S. dollar liquidity. Given the importance of dollar funding and liquidity for banks and economy in Singapore, strengthening foreign exchange liquidity of banks should be a priority.

    Through the proactive use of macro-prudential policy, MAS has demonstrated its ability and willingness to act to suppress emerging threats to financial stability. More broadly, the strong framework for financial oversight has been enhanced further in recent years. The FSAP assesses the soundness and resilience of financial system in Singapore, with a focus on cross-border linkages and financial technology. The 2013 FSAP undertook a comprehensive and detailed assessment of the financial system and its oversight in Singapore and found the MAS supervision and regulation to be very strong. The 2019 FSAP follows up on the findings and recommendations of the 2013 FSAP and takes a deep look at risks related to the cross-border links of the financial system and the challenges posed by the current and prospective financial innovation. MAS and government of Singapore have implemented many reforms to address the recommendations of the 2013 FSAP.

    Some important reforms include the adoption of the new International Financial Reporting Standards, the implementation of Basel III capital and liquidity requirements and enhancements to the framework for crisis resolution and safety nets. Building on this progress in financial sector reform, the next steps should focus on enhancing the resolution framework, including by extending the new bail-in powers to senior unsecured creditors, strengthening the MAS’ Resolution Unit, and by developing guidelines and playbooks for the new resolution tools. It would be important to ensure more resources for the oversight of the New MAS Electronic Payments and Book Entry System (MEPS+). 

    MAS has managed to strike a good balance between promoting financial innovation and preserving financial stability, investor protection, and financial integrity; however, this is a challenge that will require continued vigilance, not least to minimize potential reputational risk. One area where the balance between supervision and the promotion of financial innovation could be improved is in the requirement of pre-notification of material outsourcing arrangements if MAS is not satisfied that a bank has managed its outsourcing risk adequately. Financial innovation has amplified the risk of cyber events and MAS is at the forefront in international efforts to reinforce cyber resilience.

     

    Related Links

    Keywords: Asia Pacific, Singapore, Banking, Insurance, Securities, FSSA, Article IV, FSAP, Technical Notes, Basel III, Stress Testing,  Macro-Prudential Policy, Financial Stability, Resolution, Fintech, IMF

    Featured Experts
    Related Articles
    News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News
    News

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News
    News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News
    News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News
    News

    HKMA Consults on FIRO Code, Revises Policy on Foreign Exchange Risk

    The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.

    January 18, 2022 WebPage Regulatory News
    News

    FI Publishes Multiple Regulatory and Reporting Updates

    The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.

    January 17, 2022 WebPage Regulatory News
    News

    EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues

    The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.

    January 17, 2022 WebPage Regulatory News
    News

    BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance

    The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.

    January 16, 2022 WebPage Regulatory News
    News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7881