change this mindset, and get people to understand that only a limited first tranche of their deposits with a bank is protected should the bank run into trouble. but disclosure by itself is not enough. it must be accompanied by investor education. investors have to understand and use the information provided to them. they must learn to make sense of this information and use it to look after their own interests. we also need a pool of knowledgeable analysts and journalists who will shine the spotlight on any obscure fine print that the lay investor fails to notice. a more informed and sophisticated investor base will reinforce market discipline and form the basis for a more vibrant and mature financial sector. in all these respects, we have a long way to go. market discipline also requires an effective enforcement regime. to preserve investor confidence, penalties for transgressions must be swift and appropriate. mas now has the power to investigate and bring a court action for market misconduct under the new civil penalty regime. this will complement the existing criminal penalty regime administered by cad. liberalising the financial sector we began to open the financial sector to greater competition while the region was reeling from the asian crisis. this went against conventional wisdom. opening up during such a time seemed like throwing away the life - jackets as the flood waters rose. we thought otherwise. we could see the flood approaching – not just the storm we were then in, but the greater climatic challenge posed in the longer - term by the worldwide changes in the financial industry. we decided that we had better learn to swim before the deluge overwhelmed us. furthermore, our actions to liberalise in the midst of the crisis would send a clear signal that singapore ’ s financial centre would always be open for business. banking the two major areas of liberalisation have been in banking and the capital markets. liberalisation has brought about major changes in the local banking scene. from six local bank groups ( not counting posbank ) in 1997, we are now down to three through mergers and acquisitions. more importantly, the local banks have rationalised their operations, upgraded their risk management systems, and introduced new products and services. the recent housing loan price war is an example of consumers benefiting from more banking competition. but fiercer competition has also inevitably meant that small accounts enjoy fewer cross - subsidies, and have to bear higher charges and tighter usage limits. the basic banking account scheme will help reassure consumers that necessary reforms will not leave them without banking services. overall, our banks face tougher challenges than

be extended to all facets of mas ’ dealings with industry. industry feedback will help us refine our policy and avoid mistakes and unintended consequences. our contacts with industry need not be confined to singapore. more often than not, business decisions that affect singapore are made in the head offices. where possible, we should extend our presence and reach by linking up with institutions and organisations worldwide. deepen talent pool third, we need to deepen the talent pool in the financial sector. the vibrancy of singapore ’ s financial centre is dependent on this. without the trained talent, it will be very hard to persuade financial institutions to site new activities in singapore. mas must continue its efforts to build up and upgrade this talent pool. while mas is already co - funding financial skills training, we also need to extend our efforts into improving the quality and quantity of financial training and research conducted in singapore. one possibility is to set up specialised financial service institutes in singapore to teach both the art and science of finance, for example in wealth management. at the same time, the local talent pool must also be supplemented by infusions of fresh blood from abroad. singapore must continue with its open door policy to attract talented professionals to work here. another means of deepening the overall talent pool is through greater circulation of talent between the public and private sectors. mas has actively hired from industry in order to build up its expertise. this has enhanced our understanding of the commercial environment and invigorated our organisation. just as mas has gained from such insider insight, industry too needs its share of talent. through the mixing of talent between the public and private sectors, industry will also come to understand the intent and thinking behind mas ’ policies and actions. over time, this will lead to a healthier and more constructive relationship where mas and industry together work toward developing singapore as a world - class financial centre. enhance market discipline fourth, we need to continue to enhance market discipline. the easy part is to establish and enforce the right rules for disclosure and corporate governance. getting companies to internalise and abide by the spirit of tighter rules will take longer, though our standards of disclosure are already quite good compared to other countries. the most difficult part will be enhancing consumer education and awareness, without which, as i noted earlier, disclosure and caveat emptor cannot work. we do not need to convert the entire population into chartered financial analysts. but we must help the public to understand basic finance and investment concepts, and