Board members must also be able to participate actively in strategic discussions, to facilitate the flow and cross-fertilisation of ideas, and exercise effective oversight over the management. Thus in the US, the Federal Reserve Board inspects banks’ board minutes to determine if all board members are active and contribute to discussions on important matters. BIS Review 130/1999  1  Singapore banks are prudently managed and financially sound. According to the latest Moody’s ratings, they were collectively rated the ninth best in the world and best in Asia. But benchmarked against international best practices of corporate governance and disclosure, they still have some way to go. One major step we have taken is to require all local banks to appoint nominating committees within their boards, following common practice in the developed economies. The task of the nominating committees is to ensure that only the most competent and qualified individuals, who can contribute actively to the bank and discharge their responsibilities in the interests of all shareholders, are appointed to the board and to key management positions. Such appointments are not a one-off exercise, but a continuing requirement. In Singapore politics we have made self-renewal of leaders a norm. As a result the political leadership belongs to the same generation as the population, and stays vigorous, up to date, and in tune with the electorate. But self-renewal is necessary in every field, including banking. The boards of Singapore banks have done commendable jobs discharging their responsibilities.

MAS will follow up by allowing $ OTC interest rate derivatives, such as interest rate swaps, forward rate agreements, interest rate options and swaptions, to be transacted freely without consultation. Banks will, however, be required to submit monthly reports on details of interest rate derivative transactions exceeding $ million with counterparties outside Singapore. Credit rating of foreign entities issuing $ bonds So far, we have required foreign entities which wish to issue $ bonds to be of good credit standing. Up till now the lowest credit rating of foreign entities that have tapped the $ bond market has been single A. Debt intermediaries have told us that investors in the $ market would like to see a wider credit spectrum of $ bonds. MAS recognises that allowing more diversely rated bond issues would increase investment opportunities for investors with different risk-return appetites, allow portfolio diversification, and create more investor interest in our debt market. To widen the credit spectrum of foreign entities tapping the Singapore dollar bond market, MAS will allow the following to issue Singapore dollar denominated bonds: a) all rated foreign corporates; b) all sovereigns, rated or unrated; and c) unrated foreign corporates, provided the investor base is restricted to sophisticated investors.1 However, the requirement for the non-resident issuers to convert or swap the $ proceeds into foreign currency for use outside Singapore remains. MAS still does not allow $ funding of non-residents where the proceeds are to be used outside Singapore, or for purposes which do not generate economic value to Singapore.