the board ’ s responsibility in risk governance, and providing further guidance on companies ’ engagement with shareholders. going beyond the rules 6. rules on corporate governance – mandatory or otherwise – have been considerably enhanced in most major jurisdictions. yet, rules alone cannot assure us of high standards of practice. the recent financial crisis has exposed significant shortcomings in the governance of companies. we have seen monumental failures in risk management, a spate of accounting scandals and outright fraud. closer to home, sgx - listed companies have had their fair share of failures in corporate governance. bis central bankers ’ speeches 7. the answer does not lie in even more rules. we must now focus on changing behaviour and building capabilities, to make the recent reforms meaningful. let me highlight three areas : • one, strengthening market discipline • two, building board competencies • three, instilling the right values strengthening market discipline 8. let me begin with market discipline – the process by which stakeholders apply effective scrutiny on a company. the key enabler for market discipline is disclosure. we have put in place, in the sgx listing rules, the necessary requirements for disclosure to be ongoing, timely, and accessible. but for disclosure to enable effective market discipline, it must also be meaningful. 9. meaningful disclosure is especially important given that our code is non - mandatory. we have adopted a “ comply or explain ” approach so that we can pitch the expectations at the level of best practice while allowing companies the flexibility to deviate from these expectations if their particular circumstances warrant it. but companies must explain publicly the reasons for any such deviations so that the market can judge. 10. unfortunately, disclosures being made by companies deviating from the code are often uninformative. let me give an example. a company that did not have independent directors making up at least one - third of the board offered the following explanation : “ the board believes that there is an independent element on the board and that it is able to exercise independent judgment on corporate affairs ”. the statement does not provide any evidence or information to shareholders on how the independent element is achieved in spite of the smaller number of independent directors. 11. companies should provide meaningful explanations of their reasons for deviation, and not opt for “ template ” disclosures that shed no light on these reasons, or worse, obfuscate the issue. there is scope for standardising the format in which disclosures of compliance with key principles in the code are made, to facilitate comparability

inflation and aggregate demand are more significantly influenced by the exchange rate rather than interest rates. singapore ’ s monetary policy is therefore centred on managing the exchange rate of the singapore dollar against a basket of currencies within a policy band. 2 / 7 bis central bankers'speeches the reserves play an important role in enabling mas to conduct monetary policy and to secure macroeconomic stability. how are the reserves accumulated and managed? so, how are the reserves accumulated and managed? as i mentioned earlier, singapore ’ s reserves are held and managed in three distinct pots : the mas, gic, and temasek. the government sets the overall investment objectives for the three entities and monitors the risk and return profile of the total reserves. but it plays no role in the investment decisions by the three entities, which are made on purely professional grounds. mas, as singapore ’ s central bank, manages the ofr. the process of accumulating or using ofr is intricately tied to mas ’ conduct of monetary policy. the mas may accumulate or sell foreign assets, principally through its intervention operations in the foreign exchange market, to manage the float of the singapore dollar. given singapore ’ s positive net savings and persistent capital inflows, the nominal exchange rate often tends to appreciate more than what is required to keep inflation low and stable. the mas accumulates foreign assets on average in the process of managing the singapore dollar within its policy band even as it sells foreign assets during times of stress on the singapore dollar. as the central bank, the mas is the most conservative of the three investment entities, with the ofr invested mainly in safe and liquid assets. the ofr is sized to take into account its role as a buffer against a large and sudden outflow of capital that would undermine confidence in the exchange rate and singapore ’ s macroeconomic stability. traditional measures of reserve adequacy such as the number of months of imports the ofr could finance if all other sources of foreign financing dried up are less relevant for singapore. a sizable and liquid ofr sends a clear signal that mas has the wherewithal to resolutely defend the singapore dollar against speculative attacks. the gic is a professional fund management company that manages the government ’ s foreign assets. these assets are separate from the ofr. the history of gic begins with the mas. through the 1970s, singapore ran persistent fiscal surpluses, received sizeable capital inflows, and had an elevated private savings rate. this led