Complex control adds, not subtracts, from the Knightian uncertainty problem. The US constitution is four pages long. The recently-tabled Dodd Bill on US financial sector reform is 1,336 pages long. Which do you imagine will have the more lasting impact on behaviour. Second, faced with uncertainty, the best approach is often to choose a strategy which avoids the extreme tails of the distribution. Technically, economists call this a “minimax” strategy – minimising the likelihood of the worst outcome. Paranoia can sometimes be an optimal strategy. This is a principle which engineers took to heart a generation ago. It is especially evident in the aeronautical industry where air and space disasters acted as beacons for minimax redesign of aircraft and spaceships. Third, simple, loss-minimising strategies are often best achieved through what economists call “mechanism design” and what non-economists call “structural reform”. In essence, this means acting on the underlying organisational form of the system, rather than through the participants operating within it. In the words of economist John Kay, it is about regulating structure not behaviour. 23 Taken together, these three features define a “robust” regulatory regime – robust to uncertainties from within and outside the system. Using these robustness criteria, it is possible to assess whether restrictions might be preferable to taxation in tackling banking pollution. To illustrate this, contrast the regulatory experience of Glass-Steagall (a restrictions approach) and Basel II (a taxation approach). Glass-Steagall was simple in its objectives and execution. The Act itself was only 17 pages long.

With more global and regional functions anchored here and as the sector transforms with digitalisation and new growth engines, FIs might need to bring in foreigners with the experience and skills that are not yet available locally. Most do so responsibly, by ensuring that they concurrently build the local talent pipeline in specialist expertise and groom locals into leadership positions, even as they bring in foreigners to plug immediate capability gaps. FIs should commit to good HR practices that consider Singaporeans fairly, and have action plans to grow their pool of Singaporean professionals and leadership. 17. FIs should abide by the Tripartite Advisories on Human Capital Practices, and put in place progressive human capital practices. Where an FI is suspected to have discriminatory hiring practices due to their workforce profiles, the FI will be subject to additional scrutiny in its employment pass applications, as has happened to firms put on the Fair Consideration Framework Watchlist. Building a strong pipeline of local talent, is key to supporting and sustaining an FI’s long-term build-out in Singapore. It will engender rootedness of the FI to Singapore, and 18.  facilitates their deeper appreciation of Singapore and the region’s dynamics to facilitate better business outcomes as well. We must work to ensure that Singaporeans have opportunities to grow and take on bigger roles in their careers. MAS urges all FIs to step up in three ways 19. First, FIs should review their hiring practices to ensure compliance with MOM’s requirements under the Fair Consideration Framework. 20.