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.

Such a competitive and pro-enterprise environment will bring out the areas in which we have a competitive advantage. We cannot predict in advance which activities will take off. But when some activities succeed we can promote and encourage their development, always pushing in the direction of market forces, and not against them. Conclusion MAS has built a reputation for credibility, prudence and competence over the last 30 years. But major challenges lie ahead. We have to manage exchange rate policy in an increasingly volatile market, build a sound and responsive regulatory environment that allows the financial industry to thrive, and promote Singapore as a financial centre even in the midst of adverse external conditions. It is always easy to shelter from change, to reject anything new and to adopt a risk adverse approach. But if the sole objective of a captain is to protect his ship, then his vessel would never leave port. Over the last few years, we have altered our course – opening up to, rather than sheltering from, the winds of change. 6  BIS Review 67/2001  To navigate in this dynamic environment, MAS will have to continue to strengthen its own capabilities. The pace of change is intense, and the demands on MAS’ resources, expertise and judgement will only grow. We must broaden our contacts and consultation with market participants and fellow central bankers and regulators. This is the way to keep abreast of the latest developments in the financial industry, and evolving best practices in central banking and financial supervision.