heng swee keat : the impact of the global financial crisis on asia keynote speech by mr heng swee keat, managing director of the monetary authority of singapore, at the international institute of finance ( iif ) asia regional economic forum, singapore, 4 march 2009. * * * introduction ladies and gentlemen, good afternoon. i welcome the international institute for finance ( iif ) for holding its asia regional economic forum in singapore. it is good to see such a diverse group gathered here for this forum. an unprecedented crisis the most commonly used adjective to describe the current financial crisis is " unprecedented ". indeed, many aspects have been exceptional – • the speed at which events unfolded and triggered a series of domino effects ; • the scale of the impact, which has become global ; the range of financial institutions and investors affected ; • the near - perfect correlations of markets and asset classes that had been uncorrelated when conditions were benign ; • and the range of unconventional measures taken by financial authorities globally to try and arrest the unfolding crisis. these features of the crisis are exceptional. but perhaps the most crucial aspect that has had a profound effect on the dynamics of this crisis and its impact on emerging economies, is that unlike various past crises, this current crisis originated in the us. this is unlike various financial crises in the past 25 years or so – which tended to have certain recurring themes, and which tended to begin in emerging economies before their knock - on impact was felt internationally. the analytical tools and policy prescriptions for dealing with such crises became more tried and tested over time, even if applied in too dogmatic a fashion at times. global institutions, whether it was the imf, developed nations, or a consortium of strong international banks, had the wherewithal to bring sufficient resources to bear on the problem. crisis resolution was never easy but did not quite look insurmountable. not so this time. the epicenter of this crisis is the us – it is the world ’ s largest economy, holder of the international reserve currency, and home to the largest and most sophisticated financial system. so we are talking about the core of the global financial and economic system where severe problems arose and have since spread across borders. in the us, the “ shadow ” banking system grew rapidly but was quite opaque in the way it operated. before long, problems built up and spread to engulf the “ traditional ” banking sector. within a short time, commercial banking operations were severely

they are members of exchanges or not. bis central bankers ’ speeches exchanges, depending on the type of products that they offer, may need to impose differentiated requirements on different members depending on the assessment of product risks and credit worthiness of their members, which may or may not be regulated by mas. protocols on information sharing between mas and exchanges ’ sro units will hence be mapped out. 30. at a broader level, we believe this change will lead to greater supervisory efficiency and better system - wide risk management. while exchanges will retain their regulatory responsibilities in terms of member supervision, their resources can be concentrated on the supervision of members with significant risk exposures on their respective exchange. this can include members which are not under mas ’ oversight such as those based overseas. market surveillance 31. the mas on our part will be enhancing our surveillance capabilities both within and across markets. the presence of multiple exchanges, each focused on its own markets, can give rise to blind spots as each exchange may not have the complete picture of common members ’ exposure and activities. there are also certain markets such as in the otc derivatives space that are not under the direct surveillance of exchanges. 32. hence mas, as the statutory regulator, will be in a better position to aggregate and review different pools of information in the activities across exchanges and market sectors to anticipate possible risk and to investigate potential misconduct and market abuses. 33. advancement in technology, particularly in the field of data analytics, has brought about enhanced surveillance techniques. in terms of capacity building, the mas will enhance our analytics and thematic studies of big datasets to detect hitherto complex patterns, for potential market misconduct and abuses. 34. what all these mean, is that in each market, both the exchange and mas will be looking out for potential risks, albeit based on different parameters. this will increase the robustness of the overall oversight of market activities. robust enforcement and market discipline 35. these enhancements to our surveillance efforts will complement, in a significant way, our enforcement actions against market misconduct. the objective is on early detection as well as to support more expedient investigations and tough enforcement actions. this will also augment our toolkit to combat misdemeanors such as market manipulation and insider trading. 36. mas has and will spare no effort to investigate any serious market misconduct and to take appropriate enforcement action. this is not always an easy task because investigations into market misconduct often involve complex and large scale relationships, which will necess