options that would result in a very simple set of rules that can be specified in just 12 pages of text. that is approximately half the length of the original 1988 accord. the “ simplified standardised approach ”, as we call it, is intended to be useful for those countries that do not wish to adopt all of the options available under the new framework. the trade - off, however, reflects the fact that the policy balance at stake is between simplicity and risk - sensitivity ; if one chooses simpler rules, the cost is less sensitivity to risk and hence greater conservatism in capital requirements. competition and consistency of application another broad concern that the committee has worked to address is basel ii ’ s impact on global competition. in particular, some have asked whether banks that choose basel ii ’ s advanced approaches will enjoy benefits over those that choose simpler approaches. others have wondered whether banks that remain on the 1988 accord for some time will be disadvantaged. to respond to these concerns, we should understand that adopting an advanced approach does not automatically reduce a bank ’ s capital requirements. basel ii is intended to align capital requirements more closely to risk. furthermore, some national supervisors may set higher capital requirements than implied by basel i, perhaps even higher than those implied by basel ii, depending on the risk environment. for those banks that do experience reductions in capital as a result of basel ii, some observers have questioned whether the lower requirements might provide certain advantages and make it easier for those banks to acquire other banks that do not share in the same benefits. history suggests that this particular concern may be unfounded. in a paper published this past february by the federal reserve, researchers reported that they did not find convincing evidence that past changes in capital requirements have had a substantial impact on mergers between banks. the issue of competition between banks has also come up in the context of competition between countries. here, we should remember that basel ii is intended to help ensure that international competition in banking markets is driven by the strengths of each bank, rather than by differences in each country ’ s rules. one way that the committee has sought to promote a consistent application of the new framework is by providing banks and supervisors with detailed requirements where necessary. as i have already mentioned, these details may add to the appearance of length and complexity in basel ii, but that is a small price to pay for greater consistency and a more level playing field. however, given the need to have a framework which can be adapted to a wide range of circumstances, cooperation among

lim hng kiang : growing singapore ’ s vibrant insurance industry speech by mr lim hng kiang, deputy chairman of the monetary authority of singapore and minister for trade and industry, at the general insurance association 40th anniversary dinner, singapore, 26 october 2006. * * * mr derek teo, president, gia distinguished guests, ladies and gentlemen introduction i am happy to be here celebrating your 40th anniversary with you. as we celebrate this important milestone, let us draw lessons from the past as we consider opportunities for the future. from $ 44m in gross premiums in 1965, the general insurance industry has grown more than 60 times, writing premiums of $ 2. 8bn in 2005. in real terms, the compound average growth rate is a credible 8. 2 %, just above singapore's average gdp growth of 8. 0 % over the same period. gia ’ s role and challenges going forward gia has played an important role in shaping the growth and development of the general insurance industry. the best practices on agency management, the premium payment framework and the revised code of practice are examples of the good work done. another important role played by gia is to be the voice for the industry. for example, the motor insurance review workgroup's initiatives were pivotal in steering the motor insurance sector's return to profitability. gia has also taken a pro - active stance in educating consumers on general insurance products. it has issued consumer guides and organized public seminars to educate consumers on fire insurance, property insurance, health insurance and motor insurance under the moneysense national financial education programme. there is, however, more to be done. as mr teo mentioned earlier, general insurance penetration remains low in singapore. insurance density, measured by gross premiums as a percentage of gdp, rose from 1. 0 % in 2000 to 1. 5 % in 2005, but this is still lower than the 1. 8 % in malaysia, 1. 6 % in thailand, 2. 9 % in taiwan and 3. 0 % in south korea. when compared against developed countries like uk and switzerland, which reported insurance densities of between 3. 5 % and 5. 0 %, we are much further behind. there is therefore significant room for the industry to grow. it would be worthwhile for gia to focus on improving insurance penetration in singapore by identifying insurance lines that have greater prospects for growth. mas ’ supervisory approach mas believes that there should be a constructive partnership between the regulator and the industry. on