The Singapore financial system is one of the largest financial centres in the world. It is built around a core of domestic and international banks, and offers a wide range of services. It is highly developed, well-regulated and supervised as the authorities have given strong emphasis to integrity and stability in finance whilst complying with international standards
Strengths
Banks
Monetary policies issued by the bank aim to achieve “price stability conducive to obtaining sustainable growth of the economy.” This is done by managing the exchange rate using a basket-band crawl (BBC) approach. MAS intervenes in both foreign exchange and domestic market operations that are aimed at managing systemic liquidity when necessary, and banks are required
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Profitability is high and diversified. Asset quality is good and NPLs are low and well provisioned. Financial soundness indicators for the three main domestic banks remained strong even during the global and European crises. Stress tests suggest that banks are resilient against numerous unfavourable macroeconomic scenarios as their high capitalization can offset potential losses.
At present, MAS requires banks to hold liquid assets equivalent to 16 percent of qualifying liabilities, However, supervisors can enforce a higher or lower requirement based on the bank’s risk
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Systemically important payment systems include the large value payment system MEPS+ and securities and derivatives clearing and settlement systems operated by the Singapore Exchange (SGX). Two financial central counterparty clearing house (CCPs) are the Central Depository (Pte) Limited (CDP) that clears equities and corporate debt securities; and the Singapore Exchange Derivatives Clearing Limited (SGX-DC) that clears exchange traded and OTC derivatives. CDP’s value of transactions processed was equivalent to 94 percent of GDP in 2012. Worldwide, SGX- DC is the eighth largest clearer in exchange traded equity index futures. Singapore is also one of the largest trading centres for OTC derivatives in Asia. CDP and SGX-DC are assessed as effective and efficient CCPs with sound risk management frameworks. Both CCPs comply with relevant international standards. They are guided by SGX’s comprehensive and transparent risk management framework comprising clear policies, sound governance arrangements and operational systems, accompanied with business continuity procedures that are regularly tested. The CCPs apply a comprehensive credit risk management framework which serves to maintain sufficient financial resources to cover the default of the clearing member and its affiliates with the largest exposure, as well as the default of the two financially weakest clearing members. However, SGX’s
The presence of systemic risk in the current United States financial system is undeniable. Systemic risks exist when the failure of one firm may topple others and destabilize the entire financial system. The firm is then "too big to fail," or perhaps more precisely, "too interconnected to fail.” The Federal Stability Oversight Council is charged with identifying systemic risks and gaps in regulation, making recommendations to regulators to address threats to financial stability, and promoting market discipline by eliminating the expectation that the US federal government will come to the assistance of firms in financial distress. Systemic risks can come through multiple forms, including counterparty risk on other financial ...
In this paper, I will explore the definition of monetary policy, the objectives of the monetary and the monetary policy bases.
In normal times, the monetary authority (usually a central bank or finance ministry) can stimulate the economy by lowering interest rate targets or increasing the monetary base. Either action should increase borrowing and lending, consumption, and fixed investment. When the relevant interest rate is already at or near zero, the monetary authority cannot lower it to stimulate the economy. The monetary authority can increase the overall quantity of money available to the economy, but traditional monetary policy tools do not inject new money directly into the economy. Rather, the new liquidity created must be injected into the real economy by way of financial intermediaries such as banks. In a liquidity trap environment, banks are unwilling to lend, so the central bank's newly-created liquidity is trapped behind unwilling lenders.
In 2007, the financial crisis broke out and damaged many countries’ economies across the globe. Central banks around the world took actions to react with a series of monetary policy. Many central banks like European central bank(ECB), Federal Reserve (FED) lowered their interest rate to around zero in 2009. Because of the constraint of Zero Lower Bound(ZLB), the conventional monetary policy(CMP) is no longer efficient. Therefore, the conventional monetary policy instrument that focus on a short run interest rate converting into concentrate on the adjustment of central’s balance sheet, which is the unconventional monetary policy(UMP). ECB and FED have implemented unconventional policy such as purchasing the government debts and lowering the requirement of loan collateral.
Conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices.
The Federal Reserve plays a significant role in maintaining the stability and liquidity (the ability to turn an asset into cash) of the financial system by working towards low and stable inflation and also strive to encourage growth in output and employment . A second component, the Federal Reserve Board...
The banking system in Panama makes use of the advanced modern technologies. In Panama City, there are approximately 100 internationally renowned banks. The presence of strict regulations regarding the banking sector by the government has seen the banking sector grow tremendously (Arboleda & Martín 152). For instance, the Panamanian government has come up with strict banking rules and guidelines, to scrutinize all the banking practices so that the banks can give good banking services to all people. To ensure this occurs, the government has ordered the submission of monthly auditing reports from all the banks to the National bank of Panama and to the Panama’s National Banking Commission. All the depositors in any bank need sureties of their securities,
Comparative advantage means that an industry, firm, country or individual are able to produce goods and services at a lower opportunity cost than others which are also producing the same goods and services. Also, in order to be profitable, the number in exports must be higher than the number in import. From the diagram we seen above, Singapore is seen to have a comparative advantage in some services. The services are Transport, Financial, business management, maintenance & Repair and Advertising & Market Research, etc. These export services to other countries improve the balance of payment. On the other side, Singapore is seen to have a comparative disadvantage in some services. The services are Travel, Telecommunications, Computer & Information,
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
Reserve Requirements, it is the amount of funds that the financial institutions have to hold in their vault. No one has the right to change the Reserve requirement, yet the Board of
In this essay we look in-depth on how government strategies and economic policy play a crucial role in the success of High Performance Asian Economies (HPAEs) during 1960 to 1990 (World Bank 1993).There are eight countries within HPAEs: South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, Indonesia and Japan. Its economic development has significantly rise that it was name ‘East Asia Miracle’ (World Bank, 1993).
Banking is a heavily regulated industry that is very protected to prevent crises that can cause huge economic harm. One topic that has been greatly debated in the history of financial systems is whether competition is good or bad for financial stability. It is complex and hard to know which side is right. Pretty much everyone with an opinion at least concedes that there are good points for both sides. All the arguments run both ways, and the evidence is mixed. History can show evidence that both sides of the argument are true. It is easy to see an example where a country had X banks and Y crises and assume causation but it is rarely that simple. Other countries’ experiences can show exact opposite results. The key is to find the right balance. There is a very wide range of possibilities concerning the relationship between competition and financial stability. For a long time it was common thinking that, competition made the financial system less stable. Therefore, regulators have restrained competition in many countries. The Great Depression caused the end of most standard competition policies in banking in order to promote fiscal stability. It was successful but smothered development and forced a burden on the customers. This caused a correction towards deregulation, which added more competition but low stability and many crises (Beck, 2010) The recent financial crises reopened the debate. There are many other factors that can affect the financial stability, such as funding structure, institutional and regulatory environments, regulatory framework in which banks operate and which sets their risk taking incentives, and probably others not even realized yet. A big factor many people look at is the willingness of risk taken by owners...
It is a known fact that the banking industry plays a huge role in today’s society, the industry has grown rapidly of many decades and still growing. The banking sector is that sector of the society that is actually responsible for the handling of financial assets for other sector of the economy, they do this by investing the financial assets in order to create more wealth in the society while regulating all the activities involved in the process. (What is the banking Sector 2015)
The above estimation has left some questions pertaining to fill the gap by attempting to identify and measure factors that determine the profitability performance of commercial banks in Malaysia. What are bank-specific determinants and macroeconomic determinants influence on banks’ profitability in Malaysia compare to other countries? Do capitalized bank is contribute more on bank performance compare to other variables? Did relationships between determinants of banks’ profitability change during the financial crisis? This study therefore, intends to examine the bank specific and macro determinants on banks’ profitability, the impact capital and financial crisis on banks profit. To answer the research questions, the dissertation selected 27 commercial banks in Malaysia including local and foreign banks to fill this gap.
This is followed in section 5 by an analysis of the recent changes in the banking industry. With the development of the financial system, declining entry barriers and the deregulation of the banking industry make banks no longer the monopoly suppliers of banking services and reduce their comparative advantages which they usually hold in the past. Whether the reasons give rise to the existence of banks are still powerful will be examined here, while section 6 offers a way of considering whether banks are declining by looking at the value added by the banks. When the value added by banks is examined, banks are not a financial intermediation, which not only conduct the traditional services but also provide more diversified