Ong Chong Tee: Financial economics Opening address by Mr Ong Chong Tee, Deputy Managing Director of the Monetary Authority of Singapore, at the SKBI Annual Conference on “Financial economics”, at Singapore Management University (SMU), Singapore, 7 May 2012. *  *  *  Professor Arnoud De Meyer, President of Singapore Management University Distinguished guests, ladies and gentlemen, good morning. Introduction It gives me great pleasure to join you today at SKBI’s second Annual Conference on Financial Economics. Since its establishment in 2008, SKBI has pursued research on topics in economics and finance relevant to Asia and the Singapore economy. A recent working paper on “Testing for Multiple Bubbles” by Phillips, Shi and Yu, for example, sheds light on techniques for identifying asset price bubbles, and has useful implications for the surveillance strategies of central banks.1 I am privileged to join an outstanding line-up of speakers including keynote speaker Professor Sir James Mirrlees. I think some of you may be familiar with his groundbreaking work on optimal tax policy, and his modelling of the key role uncertainty plays in economics. The Mirrlees Review, a recent review of the UK tax system chaired by Sir James, offers invaluable practical lessons on optimal tax design, including specific recommendations for the taxation of savings and wealth. Structural change in the Singapore economy The perfect financial storm of the recent crisis severely disrupted markets and economies, and also shook key tenets fundamental to our understanding of economics and finance.

Since the global financial crisis (GFC) giant steps have been taken at the G20 to strengthen international policy coordination and cooperation. Overall there are two opposing  2  BIS central bankers’ speeches  developments affecting the IMS. On the one hand, the significant reforms since the GFC have strengthened the IMS. But on the other hand, growing interconnectedness especially through increased international investment positions together with unconventional monetary policies pose challenges to the IMS. In these global circumstances, having faced the deterioration in inflation and its outlook reflecting the pass-through from the TL depreciation and domestic factors and elevated volatility in capital flows together with tightening global financial conditions the Central Bank of Turkey has been following a tight monetary policy to fight inflation, taking liquidity stabilizing measures for the foreign currency market and ensuring the stability of the financial system. This policy framework was announced as a “road map” document back in August 2015 outlining monetary policy, foreign currency liquidity and financial stability related measures and aimed at alleviating policy tradeoffs. The key idea is to provide market making facilities to the local banks when they face financial stresses in the global markets. They are then allowed to borrow in foreign currencies from the central bank and use their all liquid assets irrespective of their denominations i.e., local currency and foreign currency denominated assets as collateral when they borrow from the central bank in any currency. BIS central bankers’ speeches  3