And we will apply this approach on a consolidated group-wide basis across all constituent institutions, local or overseas. At the micro-level, MAS is improving the processes and techniques it uses to systematically evaluate a bank’s operations and risk profile to determine the key areas that require attention. At the macro-level, MAS is enhancing its financial surveillance capabilities, to help identify emerging vulnerabilities, and assess how they will affect individual institutions or business activities, so that we can devote adequate supervisory resources to these areas. Harmonised regulation MAS will also develop a more harmonised and integrated approach to regulation. Consistency in regulation across similar financial activities and products will help level the playing field, lower compliance costs, and reduce the scope for regulatory arbitrage. In this regard, MAS has begun to streamline the licensing regime and put in place a risk-based capital framework across the financial sector. The new Securities and Futures Act will introduce a single, modular licensing regime for securities and futures intermediaries. The Financial Advisors Act will provide a single licensing regime and a more flexible and integrated regulatory framework, with consistent standards of business conduct for entities engaging in financial advisory activities for all investment products. But this is not a one-off process. As the industries and products continue to evolve, our laws and regulations will have to evolve with them. We are making progress in applying the concept of risk-based capital.

SIMEX was the first financial futures exchange in Asia. Well before exchange linkages became the norm, SIMEX co-pioneered the world’s first mutual offset trading link with the Chicago Mercantile Exchange, facilitating round-the-clock trading. Renamed SGX-DT, the derivatives exchange today trades a broad range of interest rate, fixed income, equity and energy derivatives. A later initiative was the programme launched in 1994 to develop the fund management industry in Singapore. Our fund management industry was small compared with other financial centres. The Central Provident Fund (CPF) system was absorbing the bulk of the population’s long-term savings, and starving the private fund management industry of local funds. The Government liberalised the rules to allow CPF savings to be invested in approved unit trusts and fund management accounts. MAS and GIC went on to give modest mandates to external fund managers, although these could only be the seed money to grow the industry. At the end of 2000, the total assets managed by Singaporebased financial institutions was $ billion, four times the $ billion in 1994 when we embarked on the programme. New directions The approaches that we took in monetary policy, financial supervision and development have served Singapore well. We maintained low inflation and a macroeconomic environment favourable to growth. Our capital markets have grown rapidly over the past few years, while our forex market is one of the largest in the world. With over 200 banks and merchant banks, 150 insurance companies and 160 investment advisors in Singapore, we have become a major financial centre.