and businessmen, calling themselves the nation rescue club, has attacked the government for selling off the country on the cheap. its spokesman, a university professor, called on the thai government to publicise details of the sale of radanasin bank to uob, and nakornthon bank to standard chartered bank. the group accused the government of striking acquisition deals which allowed foreign banks to take on virtually no risk since any future losses would be borne by thai taxpayers ’ money. but over time, if the globalisation wave persists in the financial industry, countries will eventually decide that the cost of closing themselves off is too great. they may then change their position, just as over the last two decades they have done in manufacturing, opening up to reduce import barriers, and promote mnc investments and exports. malaysia ’ s governor of bank negara has said that malaysia may open up its banking sector to greater foreign participation, though only after 10 years [ bt 30 mar ]. so liberalisation will happen, although to varying degrees in different countries. the internet the internet is having a major impact on financial services. it is not just a more efficient distribution and marketing channel. it is opening up new financial applications and business models, and breaking down national barriers separating financial markets. bill mcdonough, the president of the new york federal reserve bank, has described the internet as the most important strategic issue facing financial institutions today. the best way to package and deliver financial services over the internet is not yet clear. in share trading, the success of discount brokers like etrade, and ecns like island, is obvious. there is also promising potential for trading fixed income instruments and derivatives online. but for other financial services, institutions are still experimenting with different business models and approaches. they all know that a new generation of customers will want to do business over the internet, and banks will have to meet this demand or lose business to new players. the internet has also created new roles in the financial services value chain, e. g. infomediaries, or intermediaries which gather and present information on financial products offered by different financial institutions, so that consumers can compare prices and quality at the click of a mouse before committing to a specific product like mortgages, insurance packages and loans. financial institutions will need to gear up to participate in electronic commerce. for them, the internet means not only new business opportunities, but also fiercer competition, including across borders. it will create new risks, which they must

. we have to understand the industry ’ s point of view, and yet not be captured by the industry we are regulating. this mindset must permeate the whole of mas, to every staff member. 5. industry specific issues banks the first priority for banks is to upgrade their capabilities and strengthen their management teams. this is the only way for them to hold their own in the new environment, either by themselves or linked up with others in a strategic alliance or merger. banks also need to prepare themselves for new business opportunities, especially e - banking. mas will track the progress of the banking liberalisation programme. we will review the status next year, and decide on further steps to open up the sector. local banks will come under increasing pressure, not from mas, but from the rapid changes in technology and the market. the banks will have to continually reassess their competitive positions and strategies, and adapt themselves as conditions change. mas will continue discussing with the local banks ways to increase bank transparency further, for example by disclosing more information on remuneration and incentive structures, related party transactions, the banks ’ risk profiles and their risk management processes. greater disclosure will reinforce corporate governance. singapore banks are ahead of most of their asian counterparts in these two areas, but they are still some way from the best international practices. we are reviewing the current minimum liquid assets and minimum cash balance requirements imposed on banks, and the capital requirements for financial holding companies and banking groups. this is part of the shift from regulation to supervision, replacing “ one - size - fits - all ” requirements with a more “ tailored ” approach. we should not unnecessarily disadvantage singapore banks vis - a - vis foreign competitors. we are reviewing bank involvement in non - financial activities, and the cross - holding structures typical of singapore banking groups. an appropriate separation between financial and non - financial activities is important to minimise the risk of contagion and ensure that management is focussed on the core business of banking. this is a complex issue, which mas will study carefully, and discuss with the banks. changes to existing rules can have major implications for the players, so mas will take care to give them enough time in the implementation, to make the adjustments without disrupting the markets. insurance insurance companies need to raise their standards of professionalism and proficiency. they must become more efficient and upgrade customer service. they must also become as competent as professional fund managers in managing their funds. i hope that the