ravi menon : preparing the workforce for a changing financial industry welcome remarks by mr ravi menon, managing director of the monetary authority of singapore, at the institute of banking and finance distinction evening 2018, singepore, 4 october 2018. * * * mr chan chun sing, minister for trade and industry, members of the ibf council, distinguished guests, ladies and gentlemen, welcome to the ibf distinction evening 2018. we are delighted to have mr chan chun sing as our guest - of - honour. minister chan, as you know, has played a leading role in the labour movement, to help prepare our workers for the future. and now minister for trade and industry, he is leading singapore ’ s economic development efforts. he will bring together his insights from these two important roles and share his thoughts later on building a smart workforce that is ready for the economy of tomorrow. the ibf distinction evening is probably the only large platform that brings together the entire financial industry – banks, insurers, asset managers, financial advisers. it is an opportune occasion – not only to catch up with colleagues and friends and celebrate our achievements as an industry – but to also reflect on the big drivers of change and key priorities for us as an industry. there is much celebrate. singapore ’ s financial centre is doing well. growth in financial services in h1 this year was 8 %, nearly twice as fast as the overall economy. in fact, the financial sector has been growing faster than the overall economy in 6 out of the last 7 years. year - on - year growth in the financial sector will moderate in h2 because of the high base last year and some maturing in momentum. mas expects financial sector growth for the year as a whole to average around 6 %. not bad at all, considering the challenges facing the global financial industry still emerging from the long shadow of the global financial crisis. slower trend growth, tighter regulation, keener competition, and increasingly technological disruption. we often talk about growth, regulation, competition, and technology. and indeed they are key drivers of the financial industry. but i think the issue that is of most relevance to the long - term prospects of our financial industry is people and skills. no matter how many robots and algorithms we use in our business in the future, our industry will remain a people - centred industry. the question is : what kind of people? 1 / 3 bis central bankers'speeches will they have the skills and aptitudes to harness the opportunities

that some features of recent financial innovation – including securitisation – have contributed to excessive risk taking and increased financial fragility. they explain why the crisis has been so severe. it is also striking that real – not only nominal – interest rates have stayed at low levels for an extended period of time. over the medium run, long term real interest rates are beyond the control of monetary authorities. they have been driven by the continuous increase in saving rates which occurred over the last decade, especially in emerging economies. this created a demand for safe and liquid assets which could not be met by equivalent supply in those countries. because of this “ asset shortage ”, saving flows were directed towards industrialized countries, first of all the usa. at the same time the financial system in those industrialized countries worked to produce “ complex ” assets which looked safe and liquid – and were rated as such. apparently, supply matched demand. but we know now that this was an illusion. complex assets were neither safe nor liquid. the root causes of the crisis, therefore, are deeply structural. there was a combination of excess savings and asymmetry in financial developments between countries which was conducive to the formation of bubbles. this disequilibrium was amplified and compounded by distorted financial innovation. there was little, or no, role for monetary policy in that process. looking to the future, however, it is legitimate to ask how monetary policy can better contribute to financial stability. here, i would make four points 1. financial instability should first be addressed and dealt with by specific tools. those tools come in many forms, such as capital or margin requirements, loan to value ratios and liquidity constraints. most are currently available to regulators and supervisors. they have been used, however, with one objective : ensuring the robustness and viability of individual institutions. there is now a need, which is widely recognized, for a change in perspective. regulation and supervision should be designed and implemented in a broader, systemic perspective, with the objective of ensuring the stability and integrity of the financial system as a whole. 2. there is a strong case for giving central banks a pivotal role in this new “ macro financial supervision ”. they have intimate knowledge of financial systems and markets. they have an incentive to act since monetary policy works better when financial institutions are robust and financial markets are stable and efficient. and, finally, they are well placed to have an integrated view of the economy and its interaction with the financial