While it is too early to make a firm call on the longer term consequences of the event, it will certainly weigh on both market confidence and on an already listless global recovery. •  Among the developed economies, the US has been most advanced in its recovery. This provided the impetus for the first interest rate hike in more than nine years in December 2015. However, the Federal Reserve has since held back from further rate increases amid a moderation of growth in the US and in many other parts of the world, as well as a rise in financial market volatility. •  Some central banks in Europe and Japan have adopted negative policy rates alongside other monetary easing measures to further support their economies, with mixed results. Central banks will have to be vigilant against undue financial market stresses arising from last Thursday’s referendum in the UK, and to be prepared for a period of heightened uncertainty that such an unprecedented event might entail. •  In Asia, China’s economic slowdown, softer commodities prices and weak demand in key export markets have been a drag on the region’s economies. Nonetheless, more resilient domestic demand conditions have continued to provide support to growth in many countries, including those in ASEAN. 5. The present low-growth, low-inflation environment, which in all likelihood will continue for some time, suggests that monetary policy settings in many parts of the world will remain accommodative, especially in advanced economies where inflation has been below target for a number of years.

Banks have entered into arrangements with third party service providers or other entities within banking group to perform certain operations or process transactions. These include information systems hosting, applications processing and other middle and back office operations. These outsourcing arrangements can bring cost reductions and productivity benefits. However, they may also expose the bank to reputational, compliance and operational risks. For instance, the service provider might fail to deliver the contracted service, experience security breaches, or fall short of the legal and regulatory standards that the bank is required to comply with for these operations. 22. MAS issued a set of Outsourcing Guidelines in 2004 to promote sound risk management practices among financial institutions for their outsourcing arrangements. The key guiding principle is that MAS expects banks to manage outsourcing arrangements as if the services continue to be conducted in-house. 23. MAS has consulted the industry on the revision of the guidelines. Let me highlight some of the key changes. •  First, the Guidelines will set out MAS’ expectations on the use of cloud computing services by FIs. MAS recognises cloud services can offer various benefits such as scalability and advanced functionalities, and is amenable to banks leveraging on cloud services to fulfil their business and operational needs. MAS expects banks to ensure that their risk management measures are commensurate with the nature, scope and complexity of the cloud deployment models that they adopt. •  Second, there will be a greater emphasis on safeguarding customer information.