Singapore is already an established centre for managing Asian investments of global clients, and global investments of Asian clients. The strong growth potential of wealth management makes it an industry where Singapore is well placed to become a global player. The large increase in the number of HNWIs globally has also boosted demand for estate and trust planning. We are reviewing and modernizing the Singapore Trustees Act. MAS is also reviewing the Trust Companies Act, and will take over the regulation of trust companies. These steps will enhance Singapore’s position as an international trust domicile and widen the suite of wealth management services available here. We also need to build a larger pool of wealth management skills, and continue to increase the range of product offerings for wealth management clients. Capital markets Since the Crisis, countries in Asia have recognized the importance of developing their bond markets. While individual countries have made significant progress, their markets remain fragmented and small by international standards. We need closer co-operation among the capital markets in Asia, in order to integrate the markets and collectively increase their depth and liquidity. This will allow us to effectively recycle some of Asia’s huge reserves and attract more international investors to the region. Regional governments have therefore taken several initiatives to foster a regional capital market, covering both fixed income and equity. These address both supply and demand side issues, such as easing constraints to cross border activity, forging alliances and linkages among the exchanges, as well as establishing a regional infrastructure.

Apart from portfolio management and marketing activities, companies now carry out middle-office functions such as regional trading and research. Others have centralised regional back office operations in Singapore, making full use of our efficient infrastructure, conducive business environment and stable political climate. MAS also made a major effort to develop Singapore’s capital markets. A cornerstone of this effort was the easing of restrictions on the lending of the Singapore dollar $ to non-residents. Originally, banks required MAS’ permission for any form of lending to non-residents above $ 5 million. This blanket restriction effectively discouraged $ speculation, but it also stifled the growth of capital markets. Starting in 1998, we progressively refined the restrictions to focus more sharply on lending for the purpose of $ speculation. We lifted restrictions on the trading of $ derivatives like futures, options and cross-currency swaps. We allowed non-residents to raise $ funds through debt and equity  BIS Review 39/2004  1  issuance. Eventually the policy changed so substantially that it was no longer apt to describe it as the non-internationalisation of the $ So in May this year we renamed it the policy on the lending of $ to non-resident financial institutions. Consequently, our capital markets have broadened and deepened. The debt market has matured significantly, and now provides a cost-effective alternative funding source to a diverse range of local and foreign borrowers. The SGS yield curve has been extended from 7 to 15 years. Some statutory boards have even issued bonds up to 20 years in tenor.