Investments in financial assets and real estate – Financial institutions are no longer required to ensure that $ credit facilities extended for investment purposes be withdrawn when the investments are either wholly or partially liquidated. This will relieve FIs of the need to institute additional arrangements to track their non-resident client's investments in financial assets. These measures, which take effect from tomorrow, should pave the way for even greater liquidity and range of activities in the FX, equity and debt capital markets. They should also attract offshore $ activities back onshore. We are still maintaining the two core requirements of the non-internationalisation policy – the restriction on lending for purposes of speculating on the $ and the requirement to swap into foreign currency the proceeds of $ loans, debt or equity issues if these proceeds are to be used offshore. Some market participants have suggested that we should go all the way and lift these requirements too, but we continue to believe it wise to maintain a basic stance of not encouraging internationalisation of the $ through these two requirements. They are unlikely to hinder the activities of legitimate players. They will also provide us basic safeguards in case activity in currency markets turns out not to be self-stabilising, which from time to time seems to be the case. Conclusion The new financial landscape offers many opportunities for the astute market players and investors, but at the same time, presents many challenges for regulators and supervisors.

It requires firms which are strong in technology and know-how, with systematic managements and meritocratic practices, firms which can hold their own against foreign competition, and with the potential to grow into significant industry players. Even then, such firms will complement, not replace, foreign investments by MNCs. Following this philosophy, Singapore’s economic policies will therefore remain externally oriented. We will continue to push for free trade, welcome investments, and integrate into the global economy, even as we promote entrepreneurship and seek to build Singapore firms into regional players. The pressures of globalisation can be uncomfortable, and the changes they force upon us can be painful. But globalisation has helped us to build a stronger, more resilient economy, one better prepared to hold our own against formidable competitors, and deliver a high and rising standard of living for our population. On capital account liberalisation, countries are now acutely aware that sound macroeconomic management is a key prerequisite, without which no regime of exchange controls can deliver stability. They also realise that they must sequence liberalization judiciously, and strengthen financial supervision and prudential safeguards as they liberalize. In the aftermath of the crisis, no Asian country imposed capital controls, apart from Malaysia. But several tightened safeguards to reduce the risks of destabilising capital flows, and to shield domestic foreign exchange and money markets from speculative pressures emanating from abroad. They improved monitoring, and discouraged trading in currencies that was not related to the real economy.