BIS Review 101/2009  1  The Technical Committee of the International Organisation of Securities Commissions (IOSCO), charged with regulating the securities markets, broadened its membership to include Brazil, China and India, while the BIS Committee on Payment and Settlement Systems and the Basel Committee on Banking Supervision (BCBS) extended their memberships to encompass 9 and 14 new countries respectively, the majority of which are emerging economies. Nevertheless, there is a need now to ensure that a good balance is struck between the legitimate enlargement of these bodies to reflect our economic reality and the effective and efficient mechanisms those organisations have shown so far. For example, the Basel Committee must now find ways of adapting in order to function as a 27-member body, compared with a 13-member body beforehand. I would now like to turn to the work in progress in the areas of prudential regulation, accounting standards and the scope of regulation. As far as prudential regulation is concerned, the primary imperative is to improve the quality of capital and to harmonise its definition. And this move should go hand in hand with the quick and full geographical extension of Basel II because this framework is designed precisely to ensure that requirements are proportionate to risks and indeed it would certainly have helped if it had been implemented as initially planned before 2008. Beyond that, should we add a simple measure to our arsenal that enables us to assess leverage with a view to helping anticipate the formation of asset price bubbles?

We experienced four consecutive quarters of sequential contraction with a cumulative output loss of 9% – our deepest recession since independence. Conversely, with the subsequent recovery in the global economy, Singapore’s GDP rose sharply and now exceeds the level before the crisis. Last year, the economy grew by an estimated 14.7%. 4. Over the course of the crisis in 2008/2009, MAS’ monetary policy responses were deliberately graduated, underpinned by the objective of promoting price stability in the medium term. We did not react to every single development in the economy or the financial markets as this would have introduced unnecessary volatility and uncertainty. Following the significant deterioration in external demand in late 2008, MAS eased policy in October 2008 and April 2009 to provide support to the domestic economy. In early 2010, taking into account the strong recovery path of the economy and rising domestic cost pressures amidst high rates of resource utilisation, MAS shifted to a modest and gradual appreciation of the $ policy band. Subsequently, MAS tightened policy further in October 2010 by increasing slightly the slope of the policy band. 5. Singapore’s financial system experienced some initial strains but otherwise has proven resilient during the crisis. Banks and insurers maintained robust capital and liquidity buffers, and balance sheets were relatively strong. Their prudent risk management allowed them to weather the crisis well. MAS has also remained vigilant through the crisis, with my colleagues working hard to ensure that our regulatory and supervisory efforts remain robust. Challenges ahead 6.