Monetary Authority Of S'pore Set To Face a More Competitive World Next Year

By Tengku Noor Shamsiah Tengku Abdullah SINGAPORE, Dec 30 (Bernama) -- The Monetary Authority of Singapore (MAS) is bracing itself to thrive in a more competitive world following the underlying problems inflicting the global economy –- indebtedness and imbalances -- that remain unresolved, in particular, in Europe. Prime Minister Lee Hsien Loong, in his address at the recent MAS 40th Anniversary dinner, outlined the challenges the central bank will face in 2012. These include maintaining price stability amid a more volatile global environment, safeguarding the real value of the country's operating and financial review in a more challenging and risky investment climate. MAS also needs to ensure the safety, soundness and efficiency of the financial system in an increasingly inter-connected world as well as strengthening the republic's competitiveness as a financial centre. "It is neither realistic nor practicable for MAS to aim for zero failures in our financial system. "But its regulatory and supervisory regime should be regularly updated and risk-stratified to mitigate downside risks, especially to the public," he said. Lee said MAS must remain alert to new developments in the financial sector. The prime minister said regulation has to keep pace with new products and processes, and larger and more diverse institutions. He also said MAS must take a system-wide perspective, factor in the risks of contagion and prevent the build-up of systemic risks in asset markets or stresses in the banking system to preserve financial stability. "If MAS remains focused on its mission and displays the same spirit of innovation as in the past, I'm confident it will have a bright future," he said. Meanwhile, in its latest highlights on Singapore's economic development, MAS said Singapore's economy recorded modest growth in the third quarter of 2011. However, key industries such as electronics, continued to contract alongside declining global demand. It said short-term global growth prospects are uncertain as significant risks loom over the global economic, particularly in the advanced economies, which are weighed down by sovereign debt issues in the eurozone, as well as a weak labour market and fiscal consolidation in the US. Regional economies will also see slower growth, alongside the downturn in external demand. Amid subdued global economic conditions, MAS said Singapore's economy for 2012 is expected to be between 1 and 3 per cent. In particular, it said, the trade-related sectors are likely to face significant headwinds over the next few quarters. MAS also said that headline Consumer Price Index (CPI) is expected to average between 2.5 and 3.5 per cent in 2012. It said CPI inflation remains elavated over the next few months, driven by the cost of accommodation and private road transport before easing in the second half of 2012. Excluding these items, MAS said, core inflation will remain broadly stable and is expected to come in below two per cent from the second half of the year. MAS managing director, Ravi Menon, had earlier pledged that the authority's commitment to its mission to secure for Singaporeans a low rate of inflation and to preserve the purchasing power of its official foreign reserves. "MAS aims to keep Singapore's financial sector safe and sound amid crisis and change as well as to grow it as a vibrant and trusted financial centre," he said. -- BERNAMA