These include the Basle Committee’s work on a set of globally accepted principles of risk-based capital among banks; the Group of 30’s work in the area of standardising OTC documentation; and a collaborative effort by the Bank for International Settlements and IOSCO on recommended standards for securities settlement systems. Indirectly giving impetus to international best practices is the IMF and World Bank’s Financial Sector Assessment Programme (“FSAP”). Under this initiative, assessors will collaborate with regulators in participating jurisdictions to benchmark financial systems and practices against global standards. MAS is convinced that these efforts represent considerable value-add to the global regulatory environment and has participated in support of these initiatives. We will be undertaking an FSAP this year. As an international financial center, we are also committed to contributing to international financial stability as a member of the Financial Stability Forum, and have found our involvement in various of its working groups to be invaluable. The establishment of international standards and best practices as the way forward will become even more compelling as globalisation continues, and regulators should be prepared to stay engaged with the process. In doing so, it should be recognised that initiatives to draw up international standards in themselves also add value by prompting regulators to re-examine existing regulation and review the policy rationale behind them. This is useful in bringing dated practices back into line with international best practices. Improvements to comply with globally accepted principles will benefit the market’s growth and in the long term attract participants with strong internal controls.

The FOMC statement reaffirmed the Committee’s intention “to continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability.”2 We also reaffirmed our forward guidance with respect to the federal funds rate. The statement notes that the Committee, “currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”3 Several questions have emerged following the meeting. Most noteworthy was – given that market expectations were skewed towards anticipating the beginning of a taper at this meeting – why the Committee did not begin to reduce the pace of asset purchases. Although I can’t speak for the Committee, I can provide some reasons for my own decision. To begin to taper, I have two tests that must be passed: (1) evidence that the labor market has shown improvement, and (2) information about the economy’s forward momentum that makes me confident that labor market improvement will continue in the future. So far, I think we have made progress with respect to these metrics, but have not yet achieved success.