We have received good feedback on these proposals and will issue a final set of guidelines shortly. A less prescriptive regulatory approach requires that consumers be empowered through enhanced disclosure and education to make better-informed decisions themselves. This is particularly relevant in the current context of financial innovation which has spawned a growing array of retail products and services with enhanced distribution networks. MAS will work closely with industry associations and other public sector agencies to develop consumer guides and educational programmes to raise the financial literacy of consumers. We have also facilitated the development of industry-based mechanisms to offer consumers faster and more cost-effective ways to settle disputes with banks and insurers. The banking industry has set up a Consumer Mediation Unit and the insurance industry the Insurance Disputes Resolution Organisation. Enhancing organisational effectiveness The year was also eventful for MAS as an organisation, as we continued to build on our structure, systems, and people to better meet the challenges posed by a changing and uncertain external environment. We restructured the organisation to better integrate our supervisory functions, align resources with our objectives, and build technical and managerial depth. We stepped up efforts to enhance the skills and expertise of our staff, sending more of our staff on external attachments to financial institutions and supranational organisations, and putting in place a more systematic approach in functional training. The integration with the previous Board of Commissioners of Currency, Singapore (BCCS) was carried out successfully following the merger on 1 October 2002.

MAS has therefore re-centred its exchange rate policy band at the current level of the nominal effective exchange rate of the $ while maintaining a zero percent appreciation path and no change in the width of the policy band. Promoting key growth areas in the financial sector The weaker domestic and regional economic environment in the last two years has dampened growth in Singapore’s financial sector. Financial sector value-added contracted by 4.8 per cent in 2002 compared with a rise of 2.2 per cent in 2001. The banking industry was affected by weak loan demand. The insurance industry experienced a sharp decline in activity following three years of rapid growth. The securities industry was dragged down by falling equity market volumes and bearish market sentiment. But the weakness in overall financial activity masks strong performance in key growth areas such as asset management and treasury business. Total assets managed by Singapore-based financial institutions grew a healthy 12 per cent in 2002, bucking the global trend of a decline in assets under management. In the debt market, 2002 saw continued healthy growth in structured debt and a record number of issues by foreign entities. Singapore has also benefited to some extent from the consolidation of financial sector companies worldwide. Various institutions have chosen to centralise their regional operations in Singapore. For instance, in treasury, several global players consolidated in Singapore their regional foreign exchange and derivatives business.