3. 85 billion in fy06. this severe crisis has therefore pared back about 80 % of the gains in the preceding two years. the extent of loss has been mitigated as we raised the liquidity profile of our portfolio in the early part of 2008, in the face of greater uncertainties. with the broad based upturn in financial markets after the close of the financial year, the valuation of mas ’ foreign assets has improved and more than half of the losses have been recovered. despite the severe global conditions, singapore ’ s financial system has, by and large, weathered the crisis well. in managing this crisis, mas has focused on maintaining the strength of singapore ’ s financial system, based on three key pillars : first, maintaining sound financial institutions ; second, ensuring well functioning markets ; and third, maintaining confidence of investors. let me touch on these in greater details. in july 2009, imf upgraded its 2010 world gdp growth forecast from 1. 9 % to 2. 5 %. its 2009 world gdp growth forecast was lowered slightly to - 1. 4 % from - 1. 3 % previously. strengthening resilience – what mas has done given the openness of our financial system and the severe downturn in our economy, singapore ’ s financial system cannot be insulated. mas focused on maintaining the soundness of financial institutions in singapore. we intensified supervision of financial institutions through close monitoring of their financial soundness, holding regular discussions with the board, management, and auditors of financial institutions, and for foreign financial institutions, having constant dialogues with their home regulators and head - office auditors. stress testing major financial institutions is one of our supervisory tools that is used regularly even before the crisis. in this crisis, we have given stress tests an added emphasis, and the latest stress tests of banks and life insurers were conducted in q1 2009. as the banks and insurers here were well - capitalised and financially sound, the objective of the stress test was not to ascertain what recapitalization amount was needed, because the need did not arise. instead, the stress tests were to allow mas to determine how resilient the banks and insurers were to highly adverse scenarios. in this regard, the stress tests revealed that while financial institutions ’ financial resources would be affected by lower asset values, rising credit costs and moderating earnings, they are generally resilient even under stress conditions. a second objective is to focus the financial

of credit to cover cash needs during the severe disruption in revenues in the early days of the covid event — by far the largest monthly increase in history. banks were able to fund these loans without notable problems in part by drawing on liquidity buffers created by the new regulatory system. they have not only maintained, but actually increased their capital during this time — notwithstanding the large provisions taken earlier in the year. and they have continued to extend credit throughout the protracted evolution of the covid event, to this point largely satisfying the demand for credit in the economy. of course, having clear, consistent, predictable, and efficient rules of the game is not the end of the story. our rules are not an academic exercise. they represent concrete, binding requirements on real people and real businesses. our obligations to the public mean we need to - 5verify that our rules are being followed, detect emerging risks, and make sure any deficiencies are swiftly addressed. this is the task of the bank supervisor, rather than the bank regulator. regulation and supervision are different tasks, and i have spent this time reviewing how we have pursued the goals of simplicity, predictability, transparency, and efficiency in regulation in part to lay the groundwork for showing how much harder it is to pursue those goals in the realm of supervision. regulation and supervision both flow from the statutory authority granted to the federal reserve and the other banking agencies by congress establishing our duty to promote a safe and sound banking system. regulation does that on a generalized, system - wide basis. supervision, in contrast to regulation, looks at firm - specific issues, such as how a firm ’ s idiosyncratic risks are evaluated under our regulations, and at risk - management frameworks that cannot easily be assessed through standardized risk measures. for example, while our capital rules require banks to hold a specific level of capital, our exams focus on subjects such as the plans of management to make sure they can meet those capital requirements on an ongoing basis. supervisors summarize the results of these examinations and their overall assessment of a firm in the form of a supervisory rating, the importance of which i will discuss shortly. the progress we have made on regulation creates an opportunity for us to focus more of our attention on supervision and the principles of simpler, more consistent, more predictable, and more efficient supervisory standards. for example, because the board found that there had been significant improvements in risk management since the global financial crisis, we removed the “ qualitative objection