This will cover companies incorporated in Singapore, which hold as their subsidiary or subsidiaries, banks, insurance companies, or both, but does not itself conduct banking or insurance business. Third, regulation of the fund management industry. All fund management companies will have to meet the enhanced competency, business conduct, and capital requirements by August. Those with assets under management greater than $ will have to be licensed, while those below this threshold may operate under the “Registered Fund Management Company’ regime, which will replace the existing “Exempt Fund Manager” regime. I will now touch on the performance and development of Singapore as a financial centre. Financial centre: well-positioned for growth Singapore financial sector activity subdued in weak global environment, but longer-term prospects remain bright Singapore’s financial sector contracted on a sequential basis for two consecutive quarters in Q4 2011 and Q1 2012, amidst heightened risk aversion in global financial markets. We expect financial services activity to remain subdued given uncertainty and weakness in the global economic environment. Activities such as trading – which are very sensitive to sentiment – bore the brunt of adjustment. But other activities – tied to Asian demand – have remained resilient. They are well-positioned for growth. Asia’s demand for financial services will continue to be driven by rapid urbanisation, the demographics of a growing middle-class, and the rise of regional multinational companies in need of funding. Let me highlight a few of these growth areas. First, asset management. As at end-2011, total assets managed by Singapore-based asset managers amounted to $ trillion.

The healthy growth has continued into the first quarter of this year, buoyed by regional demand. MAS will continue to foster sustained growth in our financial sector, underpinned by a conducive ecosystem and a sound regulatory framework. Conclusion Before I conclude, a word on MAS’ accounts. MAS made foreign investment gains of $ billion but recorded an overall profit of $ billion in Singapore dollar terms due to a strong exchange rate Excluding exchange rate effects, MAS achieved net foreign investment gains totalling $ billion during the financial year (FY) ended March 2012, roughly similar to the previous FY. However, in Singapore Dollar terms, this translated to a net profit of $ billion. Let me sum up. The global economy is slowing, and financial markets remain vulnerable to renewed stresses. MAS is keeping a close watch. The situation in the Eurozone remains the most significant risk to global financial stability. MAS is monitoring the various channels of spillover to Singapore. Bringing down inflation remains one of MAS’ top priorities. Core inflation is likely to moderate to close to our historical average by the end of year. Headline inflation will also moderate but remain elevated due to high imputed rentals on owner-occupied homes and COE prices. MAS will continue to ensure that our financial markets function smoothly and that investors maintain a high level of confidence in our financial system. I will now be happy to take questions, together with my two deputy managing directors, Chong Tee and Swee Lian. 6  BIS central bankers’ speeches