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Singapore Financial System Case Study

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The Singapore financial system is well regulated, supervised and highly developed. Being one of the world’s largest financial centres, built by the presence of domestic and international banks offering a wide range of non-bank services. There has been strong emphasis on integrity and stability in finance by the authorities to comply with international standards. Taking into account these factors they have addressed most recommendations made by the 2004 FSAP. The Monetary Authority of Singapore (MAS) oversees the entire financial system and is well known for its analytical and operational prowess. This puts it as one of the best regulation and supervision authorities in the world currently. Singapore market is exposed to a wide array of domestic and international risks, especially due to its exposures to other financial centres. Amongst all the risks present, most pressing being the exponential growth of credit and real estate prices in recent years apart from these the financial system is also exposed to possible impacts from an economic slowdown in China or worsening conditions in Europe. All these challenges and risks are manageable. This portrays banks’ large capital and other cushions, and the decisive macro-prudential actions taken by MAS to address the threat of bubble in the housing sector. The authority has …show more content…

This has given rise to asset inflation in both real estate and financial markets whereas there have also been signs of strong credit growth. The asset inflation and credit growth trends are seen as vulnerabilities with the potential risk of a turn in the interest rate cycle. This combination would likely cause credit costs to rise from their current low base. The rise in interest rates would therefore push credit costs high to outweigh any potential increase in lending

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