singapore ’ s public finances were not strong, our monetary policies would not have worked as well. if singapore did not have a sound legal and enforcement framework, our regulatory policies would not have worked as well. if singapore did not have political stability, good infrastructure, and a conducive business environment, mas ’ strategies to grow the financial centre also would not have worked as well. in a world where central banks typically keep a distance from the rest of government, it is amazing how closely mas works with other government agencies in singapore – macroeconomic surveillance and national economic policies and strategies combating money laundering risks and investigating financial crimes promoting jobs, skills development, and labour market policies advancing technology initiatives ranging from e - payments to digital identity these partnerships have made a decisive difference to the outcomes for mas, the financial industry and the singapore economy. mas has achieved what it has also because of the close partnership it has enjoyed with the financial industry. in a world, where many regulators are aloof at best and hostile at worst when dealing with the industry, the relationship mas has with the industry is special. to be sure, we are a no - nonsense supervisor, not averse to setting high prudential standards, imposing tough remedial measures, and occasionally shutting down a bank or two. but mas has always believed that working with the industry, rather than against it, is the best way to achieve our shared objectives : keeping the system safe and growing the business. in this, mas has been fortunate to have an industry – banking, insurance, asset management, and capital markets – that has actively supported us through thick and thin. without you – the financial industry – we would not have the vibrant and competitive financial centre that we have today, or the market and digital infrastructures that we have built. you stood with us in crisis after crisis – in 1973, when the bretton wood system of fixed exchange rates broke down in 1985, economic recession, pan - el crisis and closure of the stock exchange in 1995, collapse of barings bank from massive losses in derivatives trading here in singapore in 1997, the asian financial crisis and closure of trading of malaysian shares on clob in 2008, the global financial crisis and when singaporean investors lost large sums of money from structured notes like minibonds and you did it again last year, amid the covid - 19 pandemic and plunge in the economy. in less than two weeks of close and intense collaboration between mas and the banking, finance company

in implementing the new regulatory standards. role of industry participants supervision has to work in concert with effective risk governance in the financial institutions. the boards and senior management of financial institutions must take ownership and responsibility to manage risks. a report issued by the senior supervisors group 2 in march 2008, on observations on risk management practices highlighted many risk management practices that improved the resilience of financial institutions during a crisis. let me highlight three areas. first, effective capital planning. banks need to conduct a thorough and comprehensive assessment of their levels of capital. these have to be “ forward - looking ”, taking into account the nature and level of the bank ’ s risk, not only under “ normal ” business conditions, but also the senior supervisors group comprises senior financial supervisors from seven countries ( united states, canada, france, germany, japan, switzerland, united kingdom ). it is chaired by william l. rutledge from the federal reserve bank of new york. under conditions of stress. the level of capital has an important “ signalling ” effect in a crisis. hence, banks need to develop funding strategies and contingency plans, ahead of crisis, to ensure there is adequate capital to maintain market confidence. a second related area is stress testing. globally, the financial industry has acknowledged that stress testing practices were insufficiently comprehensive or rigorous. robust stress testing helps the financial institution to identify the impact of adverse events and shocks, outside of the normal environment. however, let me caution that the techniques for integrated firm - wide stress testing remain in the early stages of development and need to be further refined. tipping points, correlations between risks, feedback loops, behaviours and interactions of market participants are difficult to anticipate and quantify. new approaches to stress tests are being considered, such as reverse stress testing, which requires a financial institution to identify scenarios of which the impact could threaten its survival. if done well, such an approach can help question assumptions, and uncover hidden risks and interlinkages between risk factors. capital planning and stress testing rely heavily on quantitative techniques to measure risks. the crisis shows the limitations of value - at - risk ( var ) models and other quantitative techniques. going forward, financial practitioners will have to be more critical of the assumptions behind the models, and be more prepared to apply sound judgment and reality checks. mas will, as part of its supervisory review process, continue to engage the banks on their capital planning processes, and to evaluate whether the framework is sufficiently robust and comprehensive. the