Indeed, with structural changes underway brought by, among important drivers, technological innovation, financial regulators and supervisors face important coordination challenges among themselves, and with others, going forward. I would like to highlight two of them. The first one relates to the banking sector and has to do with the implementation of the Basel 3 agreement. This is paramount to promote financial stability and avoid market fragmentation. The reforms of the regulatory framework for credit institutions after the GFC has been instrumental in making the banking sector more resilient and part of the solution and not part of the problem in managing the Covid-19 crisis. It is very important to complete the job and that a full implementation of Basel III is achieved, with the new timelines agreed in 2020. 1/3  BIS central bankers' speeches  The second challenge is the coordination across regulators and supervisors required to bridge the gap from banking sector resilience to overall financial stability. Indeed, this crisis has shown that we notably need to define a common approach in order to address vulnerabilities stemming from NBFI entities and from their strong and diverse interconnections with the banking system. Those reforms should include in my view a macroprudential approach. It is appropriate that this topic is at the forefront of the FSB agenda. In addition, coordination challenges, across sectors and across borders, are emerging from areas that are not the traditional focus of financial authorities, but that already have major impact on the financial system.

Navigating the crisis But overall Singapore was less affected than most of the region. The banks were unshaken, and Singapore companies did not keel over. Why was this the case? Firstly our economic fundamentals were sound. We had pursued pro-business and pro-development economic policies for many years, and maintained consistently low inflation.5 We had kept our economy open, and had taken a market-oriented approach towards economic development. So 4 5  Keynote Address, Meeting on Good Governance for Financial Institutions, Bangkok, 10 June 2000. Singapore’s inflation averaged 2.1% between 1981 and 1999 while the average figure for the Group of Seven developed countries over the same period was just over 4%. 5  BIS Review 76/2000  investments did not go into industries in which we lack competitive advantage, and Singapore companies were generally efficient. Secondly, the Government had a strong financial position. Indeed it continued to register a budget surplus throughout the crisis. We had no foreign debt, much less short-term debt. Foreign exchange reserves were comfortable. Thirdly, our response to the crisis was to reduce business costs directly, to help businesses stay viable and so preserve jobs. No company was bailed out by the Government; no creditor was prevailed upon to maintain a loan to a failing borrower. Instead we granted rebates in taxes and government charges across the board, and reduced employers’ monthly contributions to employees’ retirement fund – effectively a wage cut. Fortunately union leaders understood the gravity of the crisis, and helped to persuade workers to accept this unpalatable prescription.