Smart regulation – sound but purposeful I would describe our approach – or at least our goal – as smart regulation: regulation that is sound yet purposeful. MAS seeks to do this in three ways. •  First, regulation is aligned with the best international standards but is also appropriate to the risks in domestic markets. 2  BIS central bankers’ speeches  •  Second, regulation is complemented with intensive supervision that calibrates responses according to the risk profile and impact of individual institutions. •  Third, regulation is focused on outcomes rather than prescribed checklists and is implemented in a way that seeks to minimise compliance burden. Aligned with international standards and appropriate to domestic risks MAS’ regulatory framework is aligned with global standards and principles. Indeed, we play an active role in developing many of these standards through active participation in various international standard setting bodies, including the IAIS. Global standards promote financial stability by providing a more level playing field for financial institutions and minimising regulatory arbitrage. But financial markets are not homogeneous in their risk profiles. It is necessary to apply regulatory standards in a manner that is sensitive and appropriate to the risks associated with particular markets and activities. Take for example our risk-based capital (RBC) framework for insurance. Insurance companies in Singapore have been subject to RBC requirements since 2005, predating Solvency II. At that time, there was no international capital standard for insurers, let alone one that is risk-based.

During the Global Financial Crisis and subsequent Eurozone crisis, macroeconomic shocks, financial market stresses, and institution-specific vulnerabilities interacted in complex ways with consequences for both systemic stability and the safety of individual institutions. The two-way flow of information and sharing of perspectives between the central banking and supervisory arms of MAS proved invaluable in helping us assess a rapidly evolving situation and co-ordinate appropriate policy responses in a timely manner. Having central banking and financial supervision within one organisation is not the only way to achieve better financial stability outcomes. It makes sense in a small country like Singapore. Larger jurisdictions have sought the same outcomes through strengthened coordination mechanisms among the various agencies whose work contributes to financial stability. The Financial Stability Oversight Council in the US and the Financial Policy Committee in the UK are two good examples. Third, being a financial regulator as well as promoter of financial sector development helps ensure that regulation is not only robust but sensitive to the broader needs of the economy. Lest there be any doubt, financial stability is our overriding objective. But a safe financial sector that does not help to meet the needs of businesses and individuals or support economic growth and development misses its purpose. Sound regulation is about promoting a robust yet vibrant financial sector that supports the wider needs of the economy. Our experience has been we can achieve better stability and development outcomes within one organisation with a shared purpose rather than separate agencies with possibly conflicting goals.