The requirements set by the authority are in line with those prescribed by Basle, including the riskweight approach to assess capital adequacy, with weights of 0%, 20%, 50% and 100%, the division of the constituents of capital in tiers 1 and 2 and capital required to cover exchange risk and interest rate risk. Additional measures to strengthen prudential rules in Brazil included regulations issued in 1998 (internal controls), 1999 (credit risk classification) and 2000 (liquidity risk). As a result of the internal controls regulation (Resolution 2554), the board of directors is considered responsible for the smooth functioning of the internal control system, internal auditors must present semi-annual report on the quality and effectiveness of internal controls and supervision can restrict activities and operations where the internal controls are not satisfactory. Resolution 2682, on credit risk classification, introduced a forward-looking approach, specifying that loans must be classified not only according to their past due status, as it was previously done, but also based on the creditworthiness of borrower and on the nature of the transaction. Banks, according to Resolution 2.804 must follow specific liquidity management policies, such as: sound liquidity practices, the use of alternative scenarios and the application of stress tests (reviewed by supervisors). Returning to the implementation of Basle II, supervision in Brazil is as yet undecided with respect to the date of implementation or the timetable to be followed, as this will depend very much on the intentions and readiness of the banks and on the existence of robust and consistent databases and models.

In managing this crisis, MAS has focused on maintaining the strength of Singapore’s financial system, based on three key pillars: first, maintaining sound financial institutions; second, ensuring well functioning markets; and third, maintaining confidence of investors. Let me touch on these in greater details. 1  In July 2009, IMF upgraded its 2010 world GDP growth forecast from 1.9% to 2.5%. Its 2009 world GDP growth forecast was lowered slightly to -1.4% from -1.3% previously. BIS Review 91/2009  1  Strengthening resilience – what MAS has done Given the openness of our financial system and the severe downturn in our economy, Singapore’s financial system cannot be insulated. MAS focused on maintaining the soundness of financial institutions in Singapore. We intensified supervision of financial institutions through close monitoring of their financial soundness, holding regular discussions with the board, management, and auditors of financial institutions, and for foreign financial institutions, having constant dialogues with their home regulators and head-office auditors. Stress testing major financial institutions is one of our supervisory tools that is used regularly even before the crisis. In this crisis, we have given stress tests an added emphasis, and the latest stress tests of banks and life insurers were conducted in Q1 2009. As the banks and insurers here were well-capitalised and financially sound, the objective of the stress test was not to ascertain what recapitalization amount was needed, because the need did not arise.