developments. the new framework is expected to be introduced in the second half of 2001, and will take into account comments and findings from two rounds of consultation with the industry. in banking, where risk - based capital standards already exist, mas welcomes the key thrusts of the proposed new basel capital accord. it has been working closely with the local banks to develop their capabilities and resources, so as to implement the internal ratings based approach. liberalising access liberalisation efforts have kept pace. a more open and competitive environment will spur innovation and enterprise in the financial centre as well as provide singaporeans with quality financial services. the insurance industry is completely open. the securities industry has been substantially liberalised and will be completely open from january 2002, when remaining trading restrictions on new members admitted to the singapore exchange will be removed. in banking, mas has announced its second liberalisation package which will free up the wholesale market and considerably enhance competition in the retail market. promoting corporate governance and market discipline sound corporate governance and effective market discipline will complement mas'prudential oversight, in fostering the safety and soundness of financial institutions. mas has taken several initiatives to improve corporate governance and information disclosure. the banking act has been amended to give legislative effect to the policy requiring separation of financial and non - financial activities in singapore banks and the unwinding of cross - shareholdings. this will limit the contagion risks to the banks, enhance market discipline, increase transparency and ensure that bank managements focus their attention on the core banking business. local banks, in consultation with mas, are adopting corporate governance standards that will, in areas such as the independence of the board and board committees, go beyond the recommendations of the corporate governance committee. for financial year 2000, local banks improved their disclosure of directors'remuneration, related party transactions, and risk management practices. they will disclose further details on these areas next year, putting them on par with their international counterparts in terms of public disclosure. implementing risk - focused supervisory framework recent regulatory reforms by mas have also been motivated by the shift away from a " one - size - fitsall " regulation to a more risk - focused approach. mas is now developing a new risk - focused liquidity supervision framework that will set a bank's liquidity requirement in line with its liquidity risk profile and liquidity risk management capabilities. this shift away from a " one - size - fits - all " minimum liquidity requirement would be in line with international best practices for liquid

tharman shanmugaratnam : update on the singaporean economy statement by mr tharman shanmugaratnam, managing director of the monetary authority of singapore, delivered at the mas annual report 2000 / 2001 media conference in singapore on 12 july 2001. * * * introduction mas has had an eventful year, shaping monetary policy in a challenging and uncertain environment and continuing to liberalise and enhance standards in the financial sector. monetary policy in january this year, mas decided to maintain the existing exchange rate policy stance of allowing a modest appreciation of the trade - weighted singapore dollar within an unchanged policy band. this policy was aimed at capping medium - term inflationary pressures, while continuing to be supportive of economic activity as growth came off its cyclical high and moderated to a slower pace. economic activity slowed much more in the first half of 2001 than was expected, causing market sentiment to shift against the singapore dollar. strong demand for us dollars to fund merger and acquisition activities by domestic corporates, and a strengthening of the us dollar against the major currencies, exerted further downward pressure on the singapore dollar. the s $ neer weakened over the period, from the top of the policy band at the start of the year to the lower half of the band at end june. this trend was consistent with the change in underlying economic and market conditions. against the backdrop of a weaker external economic environment and a more protracted global electronics downturn, near term growth prospects for the singapore economy have turned significantly weaker while inflationary pressures are subsiding. the slowdown reflects a decline in demand, not an erosion of competitiveness. there is no reason for any persistent weakening of the singapore dollar. mas has therefore shifted to a neutral exchange rate policy stance, with a policy band centred on a zero percent appreciation of the s $ neer. mas will continue to guide the s $ neer within this exchange rate band, and stands ready to intervene to dampen excessive volatility should this become necessary. financial sector supervision and development mas'financial sector policies seek to promote a sound and resilient financial system while facilitating innovation, dynamism and competition. recent and ongoing initiatives by the mas have focused on : · harmonising regulation across the financial sector ; · liberalising access to the domestic industry ; · promoting corporate governance and market discipline ; · implementing a risk - focused supervisory framework ; and · developing talent in the financial sector. harmonising regulation convergence of financial activities and consolidation of financial