speeches published date : 26 may 2021 " the quest for an integrated macro policy framework " - opening remarks by mr ravi menon, managing director, monetary authority of singapore, at asian monetary policy forum and mas - bis conference on macro - financial stability on 26 may 2021 mr agustin carstens, general manager, bank for international settlements, ladies and gentlemen, good a ernoon and welcome to this year ’ s special edition of the asian monetary policy forum featuring the mas - bis conference on macro - financial stability. macro - financial stability : theory trying to catch up with practice the origins of this conference go back to a conversation that agustin and i had about 18 months ago on the need to crystallise a coherent policy framework for macro - financial stability. for the three decades preceding the global financial crisis, the traditional inflation targeting framework for monetary policy has served most economies well, delivering price stability as a basis for sustained economic growth. that framework is now coming under strain. emerging market economies ( “ emes ” ) faced with large and volatile international flows of capital have had to resort to a variety of policy tools besides traditional monetary policy to achieve both macro - economic and macro - financial stability. the advanced economies faced with rising leverage and growth in financial assets against the backdrop of extremely low interest rates are also looking at macroprudential measures to promote financial stability. practice has moved ahead of theory. in the absence of a conceptual framework, eme central banks facing large capital flows have had to experiment with the tools at their disposal – such as foreign exchange intervention, macroprudential policies, and capital flow management measures. there is now a rich body of policy experiences, especially in emerging asia, crying for a theoretical framework. we need a framework that provides coherence not only across these various policy tools but also with traditional monetary and fiscal policies. there is an active research agenda at the bis on such an integrated policy framework. as a practitioner of some of these policies, mas is delighted and honoured to organise this conference together with the bis. what is the big deal with capital flows? when central bankers from advanced economies meet, they discuss quantitative easing and r - star ( the natural rate of interest ). when eme central bankers meet, they talk about capital flows. what ’ s the big deal with capital flows? first, capital flows to emes have become quite large. annual gross portfolio inflows have grown to an average 1. 3 % of emes ’ gdp in the eight years following

sustainabilityrelated regulations and standards, and perform sustainability - related data gathering and analysis work to better take on new sustainable finance - related businesses. mas and the institute of banking and finance ( ibf ) will continue to roll out programmes to support professionals in the finance sector to upskill to take on these new sustainable finance opportunities. artificial intelligence ( ai ) let me now turn to how we intend to harness fast developing technologies in ai and quantum computing. financial institutions are no strangers to ai and have deployed machine learning for many years. with genai, fis globally have started piloting the technology across a range of use cases, albeit cautiously in middle office or backend functions. in singapore, we observe a wide spectrum of fis with varying degrees of ai readiness and in different stages of ai adoption. the pace of adoption is expected to pick up with better understanding of its opportunities and risks. we see the potential for singapore to anchor key capabilities to develop and deploy ai solutions in financial services. to achieve this, mas aims to focus on three key areas – talent ; trust ; and technology centres of excellence. talent first, we need to build a financial sector talent pool with strong ai competencies. the roles and activities undertaken by many finance professionals will change with the adoption of genai, enabling them to spend less time on collecting and processing information, and instead take on higher value work such as analysing insights from ai generated outputs. new job roles will also be created, for example, in – data management, prompt engineering and ai governance – as fis scale up their adoption of genai. mas and ibf have commissioned a detailed study of how genai will change jobs in the sector, and identify the new skillsets needed to perform these changing or new job roles. this enables us to take active steps to equip the financial sector workforce with the right skillsets to capture the opportunities the genai brings. 9 / 12 bis - central bankers'speeches we expect to publish the findings and recommendations early next year. trust second, there must be trust and confidence in financial services powered by ai. a strong foundation of governance is essential so that ai is used responsibly and meets high standards. in 2018, mas released the feat ( fairness, ethics, accountability, transparency ) principles, which were co - created with the financial industry. the veritas industry consortium, led by mas, subsequently developed an assessment methodology and toolkit to help fis assess whether their use of ai solutions is aligned with