The tests suggest that major financial institutions in Singapore would be able to withstand adverse financial and economic shocks. MAS will continue to monitor closely developments in the Eurozone and their potential impact on Singapore’s economic and financial stability. The 2008 financial crisis and current crisis in the Eurozone underscore importance of building a sound financial sector through strong regulation and supervision. 4  BIS central bankers’ speeches  A sound financial sector Singapore will continue to meet or exceed international regulatory standards Let me touch on efforts on the regulatory front in three areas: strengthening our banks’ ability to absorb losses; enhancing our frameworks for consolidated supervision; and extending scope of regulation to cover all fund management companies. In the area of loss-absorbency, Singapore will fully implement the Basel III capital standards. Singapore-incorporated banks will meet Basel III minimum capital adequacy requirements two years ahead of the Basel Committee’s timeline of 1 January 2015. They will then meet, from 1 January 2015, MAS’ capital adequacy requirements that are 2% higher than the Basel III global capital standards. Next, we are stepping up consolidated supervision of financial groups. In banking, MAS has always conducted group wide supervision. We are increasingly focusing on areas such as mitigating intra-group contagion risk, preventing the multiple use of capital within the group, and limiting group concentration risk exposures. For insurance groups, we will be enhancing our supervisory practices. We issued a consultation paper in February this year, with detailed proposals. We will also introduce a new Financial Holding Companies Act.

In the near future, the exporting sector of the economy is expected to be sustained by improved demand in Albania’s trading partners. Fiscal indicators were characterised by higher revenues and lower expenditures during the first two months of the year. As of February, budget revenues increased 4.9%, year on year, whereas expenditure and budget deficit fell 9% and 82%, respectively. Expenditures  BIS central bankers’ speeches  1  decreased mainly due to downward capital spending, while revenues upped thanks to increase in tax revenues. These developments have determined a consolidating trend of the fiscal policy and have kept its impact on aggregate demand and economic growth subdued. Excluding the effect of payment arrears, the consolidating trend of the fiscal policy is expected to be maintained over the medium-term period. As always, the Bank of Albania endorses and encourages measures for fiscal consolidation, considering them as necessary for reducing risk premia in the economy and maintaining the country’s medium and long-term stability. Moreover, the Government will pay a part of its arrears to businesses within this budget year. This development is expected to improve the private sector’s balance sheets and demand. In response to the easing monetary policy and the liquidity situation, financial markets have been calm, in terms of trading, showing a tendency to cut interest rates. The latest key interest rate cut in February is transmitted to short-term interest rates in the money market.