Monetary Authority of Singapore ANNUAL REPORT 2015/16

Annual Report 2015/16 B C Monetary Authority of Singapore Annual Report 2015/16 D

Monetary Authority of Singapore ANNUAL REPORT 2015/16 CONTENTS

05 Chairman’s Message ROBUST, TRUSTED, DYNAMIC AND 08 Board of Directors PURPOSEFUL FINANCIAL CENTRE

10 Management Team 32 A ROBUST FINANCIAL CENTRE 32 Industry Tests 11 Governance Structure 32 Enhancing the Resolution Regime 12 Board Committees 33 Banking 33 International Supervisory Cooperation 13 Organisational Structure 34 Securities, Futures and Over-the-Counter Derivatives 14 Key Economic and Financial Statistics 36 Enforcement 16 Number of Financial Institutions 37 Sectoral Security Operations Centre in Singapore 37 Insurance

ANCHOR OF ECONOMIC AND 37 A TRUSTED FINANCIAL CENTRE FINANCIAL STABILITY 37 Preventing Money Laundering and Terrorism Financing 20 THE ECONOMY 38 Closure of BSI Bank Limited 20 Subdued Growth in the Global Economy 39 Enhancing Exchange of Tax Information 20 A Moderate G3 Recovery Framework 21 Slowdown in Asia Ex-Japan 39 Box 1: Dedicated Departments to Combat Money Laundering and Strengthen Enforcement 21 Heightened Financial Vulnerabilities and Risks 22 Low Global Inflation 39 A DYNAMIC AND PURPOSEFUL 22 Singapore’s Economic Growth Moderated FINANCIAL CENTRE in 2015 39 Financial Sector Growth Remains Resilient 23 Inflation Fell Due To Lower Oil Prices 40 Strengthening Capital Markets and Increasing Product Diversity 24 MONETARY POLICY 41 Enhancing the RMB Ecosystem 26 MACROPRUDENTIAL POLICY 41 Strengthening Infrastructure Financing 41 Harnessing Technology and Innovation 26 MANAGEMENT OF LIQUIDITY 42 Box 2: Formation of the FinTech 26 Enhancing MAS’ Standing Facility & Innovation Group 26 Renewal of the MAS-People’s Bank of China 44 Developing Globally Competitive Talent Currency Swap 45 Box 3: Unlocking Long Term Financing for Infrastructure 27 MANAGEMENT OF OFFICIAL FOREIGN RESERVES 46 Box 4: Formation of the Financial Sector Tripartite Committee 27 Investment Performance

2 Monetary Authority of Singapore SERVING THE PUBLIC, ENGAGING ONE MAS: INTEGRATED AND STAKEHOLDERS COHESIVE

50 SERVING THE PUBLIC 70 CELEBRATING 45 YEARS 50 Managing Dollars and Cents 70 Box 10: The MAS Gallery 51 Box 5: SG50 Commemorative Currency 72 Box 11: 45 Years in MAS: An Interview with 52 MoneySENSE Sapuan and Zainal 53 Box 6: Promoting Financial Literacy Through Island-wide Campaigns 74 RISK MANAGEMENT AND BUSINESS CONTINUITY 55 Facilitating Retail Access to Simple Low-cost Investment Products 74 Business Continuity, Disaster Recovery and MEPS+ Resiliency 56 PROTECTING CONSUMERS 74 International Operational Risk Working Group 56 Financial Advisory Industry Review 74 Financial Industry Security Programme 56 Encouraging Prudent Borrowing and 74 MAS’ Whistleblowing Policy Lending Behaviour 74 CONTROLS AND OPERATIONS 57 Enhancing Prospectus Disclosure Rules for Securities Offers 74 Audit Assurance 75 Procurement Management 57 PARTNERING ACADEMIA 75 Security and Fire Safety 58 Box 7: MAS Term Professorship in Economics 75 Building Services and Infrastructure and Finance at the National University of Singapore 75 ENHANCING PRODUCTIVITY AND BUILDING CAPABILITIES VALUED PARTNER ON THE 75 Staff Mobility and Productivity INTERNATIONAL FRONT 75 Reinforcement of MAS’ IT Security Infrastructure 75 Data Governance and Analytics 62 INTERNATIONAL FINANCE 62 International Financial Regulatory Reforms 76 BUILDING A STRONG MAS FAMILY 63 International Cooperation 76 Employee Engagement Survey 63 Promoting Global Growth and Stability 76 Bringing Our People Closer, Celebrating SG50 78 People Development 63 REGIONAL FORUMS 79 Leadership Development 63 ASEAN Financial Integration 79 Recognition of Staff 63 ASEAN+3 79 Partnership with Union 64 Executives’ Meeting of East Asia-Pacific Central Banks 81 FINANCIAL STATEMENTS 64 TECHNICAL COOPERATION 113 STATISTICAL ANNEXES 64 Regional and Bilateral Training 64 IMF-Singapore Regional Training Institute 134 GLOSSARY 65 Box 8: MAS Hosts Three High-Level Conferences 66 Box 9: ASEAN Financial Regulators’ Executive Programme

Annual Report 2015/16 3 WHAT WE DO

Our Mission To promote sustained non-inflationary economic growth, and a sound and progressive financial centre

Our Functions • To act as the central bank of Singapore, conducting monetary policy, issuing currency, overseeing the payment systems, and serving as banker to and financial agent of the Government • To manage the official foreign reserves of Singapore • To conduct integrated supervision of the financial sector and financial stability surveillance • To develop Singapore as an international financial centre

4 Monetary Authority of Singapore CHAIRMAN’S MESSAGE

This year’s MAS Annual Report comes at a time MAS’ monetary and financial policies aim to of heightened uncertainty around the world. preserve stability and confidence in the future Global growth is generally weak. The recovery amidst global economic fragility, and the in the advanced economies is hesitant and generally soft inflation environment. uneven despite extraordinarily accommodative monetary policies, and hampered in several In April 2016, MAS set the rate of appreciation of instances by a weakened political consensus the Singapore dollar nominal effective exchange on future directions. In Asia too, the momentum rate (S$NEER) policy band at zero percent. The of growth is slowing, amid a multi-year move represented the culmination of a series restructuring of the Chinese economy, lacklustre of measured steps MAS had taken to reduce demand in key export markets and the slow the rate of appreciation of the policy band in pace of domestic reforms in some economies. January and October last year. It recognised The unpredictable consequences of the UK the subdued inflation outlook over the next vote to leave the European Union further dented year, while ensuring price stability into the confidence globally. medium term.

Against the weak external environment, the “MAS’ monetary and financial policies Singapore economy is projected to expand by 1–3% this year. Selected clusters of trade-related aim to preserve stability and confidence activities will continue to expand alongside in the future amidst global economic regional growth. Among the domestically- fragility, and the generally soft inflation oriented sectors, there is steady demand in environment.” infrastructure and for healthcare and education.

Inflation remains subdued. Headline inflation Since 2009, MAS has strengthened existing has been negative for some time but could rules on property financing and introduced new turn positive towards the later part of this year. measures to ensure stability in the property MAS Core Inflation, which excludes the costs market and to encourage financial prudence of accommodation and private road transport, among borrowers. A full-scale property bubble is also anticipated to rise gradually over the has been averted, and property prices are course of 2016. However, the increase in core declining at a measured pace. MAS will continue inflation will be dampened by weaker external to monitor the property market, together with growth and reduced tightness in Singapore’s other government agencies. labour market. We have continued to keep a close watch on risk management practices and culture in Singapore’s “Against the weak external environment, financial sector. A thematic inspection of banks’ the Singapore economy is projected to credit underwriting standards showed that expand by 1–3% this year. Selected practices were generally sound. As part of ongoing clusters of trade-related activities will efforts to strengthen the resilience of the financial continue to expand alongside regional system, MAS has put out proposals to enhance growth.” its powers to facilitate the orderly and efficient resolution of distressed financial institutions.

Annual Report 2015/16 5 CHAIRMAN’S MESSAGE

Singapore’s financial centre is built on a working with the industry to facilitate the flow bedrock of trust and integrity. MAS requires of long-term funds to support infrastructure financial institutions to have robust controls development, especially in the Asian region. in place to prevent money laundering and This includes work to facilitate the transfer of terrorism financing and will not hesitate to take bank financing of infrastructure to institutional actions against financial institutions which fail investors, and the creation of performance to meet requirements. In 2015, MAS issued benchmarks to allow investors to better assess reprimands to several financial institutions and the risks and returns of infrastructure projects. imposed financial penalties for deficiencies in their controls. On 24 May 2016, MAS As part of the national SkillsFuture agenda, MAS ordered a merchant bank to be shut down for and the National Trades Union Congress (NTUC) serious breaches of anti-money laundering have led the Financial Sector Tripartite Committee requirements. (FSTC). The FSTC brings together the industry associations, government and labour movement, We have introduced several initiatives to safeguard to foster a versatile financial sector workforce, investors’ interests while expanding their savings well-equipped to embrace the opportunities and investment options. MAS refined its rules to and future needs of the financial industry. make it easier for eligible corporates to offer bonds to retail investors. Together with the Ministry of We are also developing a Smart Financial Centre Finance, we introduced the Singapore Savings that leverages effectively on technology. In August Bonds programme to provide Singaporeans with 2015, MAS formed a new Financial Technology a safe, long-term savings option. More recently, and Innovation Group to catalyse the growth of a MAS set out its regulatory approach to securities- vibrant FinTech ecosystem. Several global financial based crowdfunding. It aims to facilitate access institutions have since established innovation labs by start-ups and small and medium enterprises in Singapore to develop and test bed new products to alternative platforms for raising funds, while for the region. We are also seeing progress in the ensuring sufficient safeguards for investors. adoption of electronic payments in Singapore. These efforts involve streamlining payment card Supporting MAS’ efforts to safeguard consumer acceptance infrastructure at merchants through interest are on-going financial education unified Points-of-Sale (POS) terminals, and programmes by the national financial education increasing the adoption of real-time payments programme, MoneySENSE. A series of through the Fast and Secure Transfers (FAST) educational campaigns carried in both traditional system. and new media helped to drive home important financial literacy messages, such as using credit wisely and saving and investing early. “Despite the headwinds to global growth over the past year, the Singapore Despite the headwinds to global growth over financial sector continued to perform the past year, the Singapore financial sector well and was a major contributor to continued to perform well and was a major overall economic growth.” contributor to overall economic growth. MAS is

6 Monetary Authority of Singapore CHAIRMAN’S MESSAGE

This year marks MAS’ 45th anniversary. Over the years, MAS has become highly regarded internationally, both as a central bank and an integrated financial regulator. Singapore is also ranked among the leading financial centres in the world today. In February 2016, we launched the MAS Gallery, with the aim of helping the public understand the mission and roles of the MAS. It also reflects the outcomes of the hard work and professional expertise of MAS staff over the years, in promoting the growth and stability of the Singapore economy and financial system. On behalf of the Board, I would like to thank all MAS staff, past and present, for their invaluable contributions to building a credible central bank and financial regulator.

Tharman Shanmugaratnam Chairman

Annual Report 2015/16 7 BOARD OF DIRECTORS

Tharman Shanmugaratnam Lim Hng Kiang Chairman Deputy Chairman Deputy Prime Minister and Coordinating Minister for Trade and Industry (Trade) Minister for Economic and Social Policies

Heng Swee Keat Lawrence Wong Shyun Tsai Minister for Finance Minister for National Development

Lim Chee Onn Quek See Tiat Chairman of Risk Committee Chairman of Audit Committee Senior International Advisor, Deputy President, Ascendas-Singbridge Group Council for Estate Agencies

8 Monetary Authority of Singapore BOARD OF DIRECTORS

Peter Ong Boon Kwee Tan Chorh Chuan Head of Civil Service and Permanent Secretary President, (Prime Minister’s Office) (Strategy) National University of Singapore

V K Rajah Ravi Menon Attorney-General, Managing Director, Attorney-General’s Chambers Monetary Authority of Singapore

SENIOR ADVISOR TO MAS

Goh Chok Tong Emeritus Senior Minister

Annual Report 2015/16 9 MANAGEMENT TEAM

G J K E H I L F

A C B D

A. Ravi Menon E. Chia Der Jiun I. Low Kwok Mun Managing Director Assistant Managing Director Assistant Managing Director Markets & Investment Finance, Risk & Currency B. Ong Chong Tee Deputy Managing Director F. Chua Kim Leng J. Ng Nam Sin Financial Supervision Assistant Managing Director Assistant Managing Director Banking & Insurance Corporate, HR & IT Services C. Jacqueline Loh G. Lee Boon Ngiap Deputy Managing Director K. Edward Robinson Assistant Managing Director Monetary Policy & Investment Assistant Managing Director Capital Markets / Development & International and Chief Economist / FinTech & Innovation Economic Policy H. Leong Sing Chiong D. Andrew Khoo Assistant Managing Director L. Wong Nai Seng Development & International Assistant Managing Director Deputy Managing Director Policy, Risk & Surveillance Corporate Development

10 Monetary Authority of Singapore GOVERNANCE STRUCTURE

The Board is responsible for the high-level governance of MAS. The Board Committees exercise broad oversight and approve major changes to policies and strategies relating to the principal functions of MAS.

The Managing Director is responsible for the day-to-day operations of MAS and is assisted by various groups and management committees. The Executive Committee is the key decision making body at the management level. Chaired by the Managing Director, it is responsible for ensuring that MAS’ policies and initiatives are aligned with its overall direction and objectives. The Executive Committee also oversees matters referred to it by other management fora.

Board and Board Committees

MAS Board

Monetary and Chairman’s Investment Audit Risk Staff Meeting Policy Committee Committee Committee Meeting

Management Committees

Executive Committee

Financial Financial Data IT Steering Management Stability Supervision Committee Committee Committee Committee Committee

Payment Systems and Development Markets and Technology Payment and MAS- Technology and Investment and Innovation Settlement CAD Joint Development International Committee Steering Committee Investigation Steering Committee Committee Panel Group

Human Staff Staff Resource Committee I Committee II Committee

Annual Report 2015/16 11 BOARD COMMITTEES

The MAS Act provides that the Board of Directors shall be responsible for the policy and general administration of the affairs and business of MAS. The Board is assisted by the following committees:

CHAIRMAN’S MEETING The Chairman’s Meeting approves major changes to MAS’ supervisory policies and regulatory framework. It also approves major changes to policies and strategies relating to financial centre development and international and regional relations. The Chairman’s Meeting comprises Tharman Shanmugaratnam (Chairman), Lim Hng Kiang, Heng Swee Keat, Lawrence Wong and Ravi Menon.

MONETARY AND INVESTMENT POLICY MEETING The Monetary and Investment Policy Meeting deliberates and decides on issues relating to the formulation and implementation of monetary policy with the objective of maintaining price stability for sustained economic growth. The Meeting also oversees the investment of MAS’ reserves. The Monetary and Investment Policy Meeting comprises Tharman Shanmugaratnam (Chairman), Lim Hng Kiang, Heng Swee Keat, Lawrence Wong and Ravi Menon.

AUDIT COMMITTEE The Audit Committee provides an independent assessment of MAS’ internal controls and financial reporting process. The Committee also reviews the efforts of MAS’ internal and external auditors. The Audit Committee comprises Quek See Tiat (Chairman), Peter Ong and Tan Chorh Chuan.

RISK COMMITTEE The Risk Committee provides oversight and guidance on the management of risks faced by MAS. The Committee oversees the MAS-wide risk management framework, and reviews MAS’ risk management policies and processes for reporting of risks. The Risk Committee comprises Lim Chee Onn (Chairman), Tan Chorh Chuan, V K Rajah and Ravi Menon.

STAFF COMMITTEE The Staff Committee approves MAS’ key personnel policies, including overall remuneration policy. It also approves matters relating to the appointment, promotion and remuneration of senior management staff. The Staff Committee comprises Tharman Shanmugaratnam (Chairman), Lim Hng Kiang, Heng Swee Keat and Ravi Menon.

As at 1 July 2016

12 Monetary Authority of Singapore ORGANISATIONAL STRUCTURE Ravi Menon Managing Director MANAGING DIRECTOR’S OFFICE Corporate Planning and Communications Legal Internal Audit Merlyn Ee Ng Heng Fatt Timothy Ng Executive Director General Counsel Executive Director

MONETARY POLICY & FINANCIAL SUPERVISION CORPORATE DEVELOPMENT INVESTMENT / DEVELOPMENT Ong Chong Tee Andrew Khoo & INTERNATIONAL / FINTECH Deputy Managing Director Deputy Managing Director & INNOVATION Jacqueline Loh Deputy Managing Director BANKING & INSURANCE CORPORATE, HR & IT SERVICES Chua Kim Leng Ng Nam Sin Assistant Managing Director Assistant Managing Director ECONOMIC POLICY Edward Robinson Banking I Corporate Services Assistant Managing Director Loo Siew Yee Bernard Yeo and Chief Economist Executive Director Executive Director Economic Analysis Banking II Information Technology Choy Keen Meng Tan Keng Heng Lawrence Ang Executive Director Director Executive Director Economic Surveillance Banking III Human Resource & Forecasting Tai Boon Leong Susanna Lee Celine Sia Executive Director Director Executive Director Insurance MAS Academy Special Projects Lee Keng Yi Ng Nam Sin Lam San Ling Director Assistant Managing Director Executive Director Anti-Money Laundering Valerie Tay FINANCE, RISK & CURRENCY MARKETS & INVESTMENT Executive Director Low Kwok Mun Chia Der Jiun Chief Examiner Assistant Managing Director Assistant Managing Director Wan Aik Chye Finance

Monetary & Domestic Markets Teo Kok Ming Executive Director Management CAPITAL MARKETS Cindy Mok Director Lee Boon Ngiap Risk Management Assistant Managing Director Daniel Wang Reserve Management Executive Director Benny Chey Capital Markets Intermediaries I Executive Director Merlyn Ee Currency Executive Director Chung Wei Ken Executive Director DEVELOPMENT Capital Markets Intermediaries II & INTERNATIONAL Lim Cheng Khai Director Leong Sing Chiong As at 1 August 2016 Assistant Managing Director Capital Markets Intermediaries III Koh Hong Eng Financial Centre Development Director Carolyn Neo Director Corporate Finance & Consumer Paul Yuen Financial Markets Development Executive Director Bernard Wee Executive Director Markets Policy & Infrastructure Ng Yao Loong International Executive Director Luz Foo Executive Director Enforcement Gillian Tan Director FINTECH & INNOVATION Sopnendu Mohanty Chief FinTech Officer POLICY, RISK & SURVEILLANCE Wong Nai Seng Assistant Managing Director Prudential Policy Lim Tuang Lee Executive Director Specialist Risk Ho Hern Shin Executive Director Macroprudential Surveillance Wong Nai Seng Assistant Managing Director Annual Report 2015/16 13 KEY ECONOMIC AND FINANCIAL STATISTICS

2011 2012 2013 2014 2015

National Income Aggregates Gross Domestic Product At Current Market Prices (S$m) 346,172.7 361,498.7 375,751.0 388,169.3 402,457.9 Growth Rate (% change) 7.4 4.4 3.9 3.3 3.7 At 2010 Market Prices (S$m) 342,371.8 354,937.3 371,531.5 383,643.6 391,348.5 Growth Rate (% change) 6.2 3.7 4.7 3.3 2.0 Gross National Income At Current Market Prices (S$m) 338,633.7 350,004.1 364,342.2 368,995.7 383,483.5 Growth Rate (% change) 5.6 3.4 4.1 1.3 3.9

Labour Force Unemployment Rate (%) 2.0 2.0 1.9 2.0 1.9 Productivity Growth (% change) 2.3 -0.3 0.5 -0.5 -0.1 Changes in Employment ('000) 122.6 129.1 136.2 130.1 32.3 Average Monthly Earnings (% change) 6.0 2.3 4.3 2.3 3.5 Unit Labour Cost (% change) 1.6 3.0 1.4 3.2 2.8

Savings and Investment Gross National Savings (S$m) 172,539.4 173,055.1 181,189.2 180,088.9 185,439.1 As % of GNI 51.0 49.4 49.7 48.8 48.4 Gross Domestic Capital Formation (S$m) 93,555.8 107,638.7 113,905.7 112,281.8 105,806.6 As % of GNI 27.6 30.8 31.3 30.4 27.6

Balance of Payments (S$m) Goods Balance 93,131.5 87,931.2 94,653.4 100,891.1 113,456.7 Exports of Goods 545,991.9 546,654.2 547,265.5 554,704.5 518,377.8 Growth Rate (% change) 8.1 0.1 0.1 1.4 -6.5 Imports of Goods 452,860.4 458,723.0 452,612.1 453,813.4 404,921.1 Growth Rate (% change) 8.0 1.3 -1.3 0.3 -10.8 Services and Other Balances -14,147.9 -22,514.8 -27,369.9 -33,084.0 -33,824.2 Current Account Balance 78,983.6 65,416.4 67,283.5 67,807.1 79,632.5 As % of GNI 23.3 18.7 18.5 18.4 20.8 Capital and Financial Account Balance 58,050.1 28,869.6 46,706.6 58,576.9 77,052.4 Balancing Item -115,546.0 -61,680.1 -91,259.2 -117,766.2 -155,184.2 Overall Balance 21,487.7 32,605.9 22,730.9 8,617.8 1,500.7 Official Foreign Reserves 308,403.2 316,744.2 344,729.2 340,438.1 350,990.8

Inflation (% change) Consumer Price Index 5.2 4.6 2.4 1.0 -0.5 GDP Deflator 1.1 0.7 -0.7 0.1 1.6

Monetary Aggregates (% change) M1 16.1 7.7 9.9 3.6 0.1 M2 10.0 7.2 4.3 3.3 1.5 M3 10.1 7.6 4.3 3.4 1.7

14 Monetary Authority of Singapore KEY ECONOMIC AND FINANCIAL STATISTICS

2011 2012 2013 2014 2015

Interest Rates (period average, % per annum) Prime Lending Rate 5.38 5.38 5.38 5.35 5.35 Banks' 3-month Fixed Deposit Rate 0.17 0.14 0.14 0.14 0.17 3-month S$ SIBOR 0.41 0.39 0.38 0.41 0.92 3-month US$ LIBOR 0.34 0.43 0.27 0.23 0.32

Exchange Rates (period average, S$ per) US Dollar 1.2579 1.2497 1.2513 1.2671 1.3748 Pound Sterling 2.0161 1.9803 1.9573 2.0873 2.1023 Euro 1.7495 1.6071 1.6621 1.6837 1.5267 100 Japanese Yen 1.5780 1.5672 1.2840 1.1996 1.1364 Malaysian Ringgit 0.4111 0.4046 0.3973 0.3873 0.3534

Banking and Finance Commercial Banks' Assets/ 855,811.4 911,009.0 973,226.8 1,059,642.3 1,057,520.6 Liabilities (S$m) Growth Rate (% change) 9.5 6.4 6.8 8.9 -0.2

Finance Companies' Assets/ 12,165.3 14,967.5 14,985.7 15,975.7 17,409.8 Liabilities (S$m) Growth Rate (% change) 5.6 23.0 0.1 6.6 9.0

Merchant Banks' Assets/ 87,851.1 92,411.0 84,944.9 96,256.8 106,583.2 Liabilities (S$m) Growth Rate (% change) -2.1 5.2 -8.1 13.3 10.7

Asian Currency Units' Assets/ 1,019,532.9 1,093,264.6 1,180,703.6 1,190,631.8 1,155,822.6 Liabilities (US$m) Growth Rate (% change) 5.0 7.2 8.0 0.8 -2.9

Insurance Life Insurers' Assets/Liabilities (S$m) 133,905.4 148,592.5 153,208.7 168,795.7 179,188.3 Growth Rate (% change) 1.5 11.0 3.1 10.2 6.2

General Insurers' Assets/Liabilities (S$m) 27,209.4 26,267.6 26,484.0 28,606.2 30,393.1 Growth Rate (% change) 56.1 -3.5 0.8 8.0 6.2

CPF Excess of Contributions Over 14,184.8 14,321.6 13,666.8 12,423.3 13,323.9 Withdrawals (S$m)

Domestic Capital Market Net Funds Raised in Domestic 82,763.7 78,664.9 100,252.1 96,566.1 45,565.0 Capital Market (S$m)

Note: Domestic interbank rates have been discontinued with effect from 1 January 2014 and replaced with S$ SIBOR. US$ SIBOR rates have been also replaced with the US$ LIBOR, the most widely-used US$ interest rate benchmark, so as to align with the larger global US$ market.

Annual Report 2015/16 15 NUMBER OF FINANCIAL INSTITUTIONS NUMBER OF FINANCIAL INSTITUTIONS IN SINGAPORE IN SINGAPORE

End-March 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Banks 108 113 114 120 120 123 123 124 126 124 Local1 5 6 6 7 6 6 6 5 5 5 Foreign 103 107 108 113 114 117 117 119 121 119 Full banks 24 24 27 25 26 26 27 28 28 28 Wholesale banks2 36 42 41 46 50 52 53 55 56 53 Offshore banks 43 41 40 42 38 39 37 36 37 38

(Banking offices including head offices and main offices) (399) (408) (409) (421) (428) (432) (425) (428) (432) (431)

Asian Currency Units 154 158 161 162 163 165 161 159 160 155 Banks 106 111 112 117 117 120 120 121 123 122 Merchant banks 48 47 49 45 46 45 41 38 37 33

Finance Companies 3 3 3 3 3 3 3 3 3 3 (Finance companies' offices including head (39) (39) (39) (39) (39) (39) (39) (39) (39) (39) offices)

Merchant Banks 49 49 50 46 47 46 42 39 38 34

Insurance Companies 153 151 158 158 157 164 168 177 181 186 Direct insurers 61 59 62 64 63 70 72 79 80 79 Reinsurers 27 25 27 26 28 29 28 31 31 32 Authorised reinsurers 5 5 6 6 6 6 6 6 6 5 Captive insurers 60 62 63 62 60 59 62 61 64 70

Insurance Brokers 62 65 66 63 64 67 69 71 74 75

Representative Offices 43 45 36 32 37 38 40 37 39 41 Banks 43 45 36 30 34 36 38 36 38 40 Merchant banks ------Insurance3 - - - 2 3 2 2 1 1 1

International Money Brokers 10 10 10 10 10 9 9 9 10 10

16 Monetary Authority of Singapore NUMBER OF FINANCIAL INSTITUTIONS IN SINGAPORE

End-March 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 End-March 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Banks 108 113 114 120 120 123 123 124 126 124 Licensed Financial Advisers 67 69 73 71 67 67 62 58 60 62 Local1 5 6 6 7 6 6 6 5 5 5 Foreign 103 107 108 113 114 117 117 119 121 119 Capital Markets Services 183 215 221 224 251 250 295 443 493 533 Full banks 24 24 27 25 26 26 27 28 28 28 Licensees Wholesale banks2 36 42 41 46 50 52 53 55 56 53 Dealing in Securities 77 93 90 99 98 94 106 118 123 137 Offshore banks 43 41 40 42 38 39 37 36 37 38 Trading in Futures 40 46 50 48 47 50 52 59 60 68 Contracts (Banking offices Advising on Corporate 36 37 37 34 33 34 37 40 42 40 including head offices Finance and main offices) (399) (408) (409) (421) (428) (432) (425) (428) (432) (431) Fund Management 97 110 113 107 118 119 158 289 335 367 Leveraged Foreign 14 18 19 19 19 20 23 24 24 27 Asian Currency Units 154 158 161 162 163 165 161 159 160 155 Exchange Trading Banks 106 111 112 117 117 120 120 121 123 122 Securities Financing 15 16 16 17 18 17 17 17 17 17 Merchant banks 48 47 49 45 46 45 41 38 37 33 Providing Custodial 34 38 40 39 40 40 38 37 37 37 Services for Securities Real Estate Investment - - 1 7 22 23 26 31 34 36 Finance Companies 3 3 3 3 3 3 3 3 3 3 Trust Management4 (Finance companies' Providing Credit Rating ------3 3 4 4 offices including head (39) (39) (39) (39) (39) (39) (39) (39) (39) (39) Services5 offices) Licensed Trust Companies 31 35 38 40 48 50 51 52 54 53 Merchant Banks 49 49 50 46 47 46 42 39 38 34 Registered Fund ------74 236 275 273 Insurance Companies 153 151 158 158 157 164 168 177 181 186 Management Companies6 Direct insurers 61 59 62 64 63 70 72 79 80 79 Reinsurers 27 25 27 26 28 29 28 31 31 32 Authorised reinsurers 5 5 6 6 6 6 6 6 6 5 Captive insurers 60 62 63 62 60 59 62 61 64 70 1 Local banks comprise five full banks. 2 Previously known as restricted banks. Insurance Brokers 62 65 66 63 64 67 69 71 74 75 3 Data is unavailable for the period between 2007 and 2009. 4 Regulation of real estate investment trust management came into effect on 1 August 2008. 5 Regulation of credit rating services came into effect on 17 January 2012. Representative Offices 43 45 36 32 37 38 40 37 39 41 6 Registration of fund management companies commenced under an enhanced regulatory regime which came Banks 43 45 36 30 34 36 38 36 38 40 into effect on 7 August 2012. Merchant banks ------Insurance3 - - - 2 3 2 2 1 1 1

International Money Brokers 10 10 10 10 10 9 9 9 10 10

Annual Report 2015/16 17 ANCHOR OF ECONOMIC AND FINANCIAL STABILITY

18 Monetary Authority of Singapore Annual Report 2015/16 19 ANCHOR OF ECONOMIC AND FINANCIAL STABILITY

THE ECONOMY implementing a negative interest rate policy while the latter expanded the size and scope of its asset SUBDUED GROWTH IN THE GLOBAL purchase programme in March. ECONOMY A MODERATE G3 RECOVERY Global economic growth slowed in 2015 to 3.9% from 4.1% in 2014. While the G3 economies The US economy marked its sixth year of economic remained on a moderate growth trajectory, expansion in 2015, with total output rising by 2.4%, Asia ex-Japan recorded weaker outturns. similar to 2014. Improved consumer confidence on the back of steady employment growth and a strong housing market spurred private Global economic growth consumption and anchored the recovery. The slowed in 2015 to pickup in consumer spending, however, was partly offset by weaker US exports due to the stronger US 3.9% dollar and tepid global demand. Gross fixed capital from 4.1% in 2014 formation also eased considerably in the second half of 2015, on account of cutbacks in energy- related investment. The continuation of these Amid muted external demand, the United States trends, coupled with some pullback in consumer (US) and Eurozone posted relatively firm GDP expenditure, resulted in sluggish GDP growth of gains on the back of strong private consumption, 1.1% on a q-o-q seasonally adjusted annualised but Japan’s recovery was more tentative. In rate (SAAR) basis in Q1 2016. Asia ex-Japan, China’s growth moderation and the generalised slowdown in global trade flows Growth in the Eurozone picked up to 1.6% in have weighed on the region’s economic activity, 2015, from 0.9% in the previous year, as stronger particularly in the externally-oriented economies. domestic demand more than compensated for However, for the second consecutive year, resilient the drag from net exports. Private consumption domestic demand in the ASEAN-4 economies provided the largest contribution, with household provided some offsetting support. purchasing power boosted by lower energy prices. In comparison, net exports fell, reflecting Major central banks have pursued increasingly anaemic demand from China and other emerging divergent monetary policies. The steady recovery economies. Across the Eurozone, growth remained in the US economy over the past few years enabled uneven: Spain posted a stellar performance, while the Federal Reserve to raise rates by a notch in Italy and France continued to lag behind the rest of December 2015, though the pace of subsequent the bloc. Nonetheless, the pace of expansion in the policy normalisation will likely be gradual. In region quickened to 2.2% in Q1 2016 on a q-o-q comparison, sluggish growth and below-target SAAR basis, in an encouraging start to this year. inflation have compelled the European Central Bank (ECB) and the Bank of Japan (BOJ) to Japan’s GDP rose modestly by 0.5% in 2015, after intensify monetary easing. The ECB initiated a staying flat in 2014, as the negative effects of the April full-fledged Quantitative Easing programme in 2014 consumption tax hike waned. Nonetheless, the March 2015 and subsequently lowered interest recovery in domestic demand was constrained by rates further into negative territory in December. subdued private consumption which was, in turn, In January 2016, the BOJ joined the ECB in held down by slower growth in nominal wages.

20 Monetary Authority of Singapore ANCHOR OF ECONOMIC AND FINANCIAL STABILITY

Meanwhile, weak external demand, especially from spending remained relatively firm, even though the Asian markets, weighed further on economic signs of a softening in the labour market had activity. In Q1 2016, growth recovered to 1.9% emerged towards the end of the year due, in part, q-o-q SAAR from −1.8% in Q4 2015, primarily due to persistent weakness in the manufacturing and to a bounce-back in household spending after a tourism sectors. weak showing in the previous quarter. HEIGHTENED FINANCIAL VULNERABILITIES SLOWDOWN IN ASIA EX-JAPAN AND RISKS

Growth in the Asia ex-Japan economies eased Global financial markets turned volatile in early to 4.7% in 2015 from 5.2% in the previous year. 2016. Weak commodity prices and economic Reflecting the transitional frictions associated and financial uncertainties in China, weighed on with the ongoing economic rebalancing and investor sentiment. This triggered substantial structural reforms, the Chinese economy grew selloffs in global equity markets and renewed at a more moderate pace of 6.9% in 2015, capital outflows from emerging markets (EMs). compared to 7.3% in 2014. The overall expansion was underpinned by the services-producing Commodity prices have remained depressed, industries, which were buoyed by strong demand and signs of stress have emerged in commodity- for financial services. Meanwhile, the goods- related firms and sovereigns. Default rates in producing industries registered lower growth, as commodity-related sectors are expected to rise, segments of the manufacturing sector continued and commodity-exporting economies could to face excess capacity. In Q1 2016, GDP growth face greater strains on fiscal sustainability and in China slipped to 6.7% on a y-o-y basis, with ensuing capital outflows. fiscal and monetary policy helping to buffer the extent of the slowdown. Financial stability concerns have persisted in China as rising corporate defaults affected the asset quality of the Chinese banking system, Growth in the Asia ex-Japan while heightened asset market volatility has economies eased to exacerbated the pace of capital outflow. Policymakers continue to face a delicate balance 4.7% between near-term economic performance and in 2015, from 5.2% asset market stability on the one hand, and in the previous year longer-term structural reforms on the other. Strong intra-regional linkages could increase contagion to other Asian economies and banking With growth easing in China, a hesitant recovery systems from a China-related shock. in the G3, and a protracted slump in global commodity markets, exports from the ASEAN-4 The US increased its interest rate for the first time countries stagnated in 2015. Nevertheless, in more than nine years in December 2015. While private consumption growth stayed resilient, there are signs that the US economy is picking supported by still favourable labour market up, fragility in global financial markets continues conditions, while investment picked up on a to throw uncertainty over the pace of further surge in government capital spending in the rate hikes. The greater use of unconventional second half of 2015. As firmer domestic demand monetary policy is also increasing market partially offset trade weakness, ASEAN-4 GDP unease. The impact of divergent monetary growth dipped only marginally from 4.7% in 2014 policies, as well as the impact of negative to 4.6% in 2015. interest rates, will continue to be closely watched. Higher financing costs following The Northeast Asian-3 economies (NEA-3) grew rate normalisation by the US Federal Reserve at a sluggish pace of 1.9% in 2015, down from and slower EM growth has stoked concerns 3.2% in 2014, due to disappointing exports amid over household and corporate indebtedness lacklustre global demand. However, household in the region.

Annual Report 2015/16 21 ANCHOR OF ECONOMIC AND FINANCIAL STABILITY

Looking ahead, uncertainty over developments in turned negative, as underlying price pressures the United Kingdom (UK) and Eurozone could result weakened in line with a protracted period of in further financial market volatility, with possible below-trend growth. knock-on effects on financial intermediation and capital flows globally, and economic growth more In the first quarter of 2016, global headline generally. inflation, while still low, edged up slightly to 1.3% y-o-y from 1.0% in Q4 2015. Price developments LOW GLOBAL INFLATION were uneven among the G3 economies, with inflation picking up in the US as the effects of low Global inflation fell to low levels in 2015, energy prices dissipated, but moderating in the dragged down by declining energy prices and Eurozone and Japan due to relatively subdued sluggish growth. Headline inflation in the G3 growth. Meanwhile, inflation held steady in Asia economies dropped sharply to 0.2%, from ex-Japan at 3.3% y-o-y, driven mainly by food 1.3% in 2014. In the US and Eurozone, prices price increases. were unchanged in 2015, mainly due to the disinflationary effects of falling energy prices. SINGAPORE’S ECONOMIC GROWTH Nonetheless, core inflation stayed firm at 1.8% MODERATED IN 2015 in the US, reflecting diminishing slack in the labour market. Japan’s CPI inflation rate was Singapore’s economic growth drifted down 0.8%, although this was largely attributable further in 2015, with real GDP expanding by to the residual effects of the consumption 2.0% from 3.3% in 2014 (see Chart 1). The tax hike in the previous year. In Asia ex- slower growth momentum was broad-based Japan, inflation fell in 2015, as food and fuel amid a synchronised downshift in the Chinese costs eased in China and India. Inflation in and regional economies. However, some the NEA-3 was similarly weighed down by production activities were more heavily affected declining commodity prices, which also capped due to higher direct exposure to sector-specific ASEAN-4 price gains. In Thailand, inflation headwinds buffeting the global IT and oil & gas industries. At the same time, manpower-reliant Headline inflation in the G3 economies The Singapore economy dropped sharply to expanded by a slower 0.2% in 2015, 2.0% in 2015, from 1.3% in 2014 compared to 3.3% in 2014

Chart 1: Singapore’s Real GDP Growth

8

6

4

2

0

22 Monetary Authority of Singapore ANCHOR OF ECONOMIC AND FINANCIAL STABILITY sectors continued to face transitory supply-side Over the medium term, as productivity growth constraints as they adjusted to ongoing efforts to gains momentum, the economy is expected to boost productivity. settle on a sustainable growth trend underpinned by a skilled labour force, an enhanced capital From the domestic sectoral perspective, stock, and technology-intensive production the moderation stemmed largely from the processes. manufacturing sector, which saw a full-year contraction. The slowdown was particularly INFLATION FELL DUE TO LOWER OIL PRICES pronounced in the electronics and marine & offshore engineering industries, reflecting MAS Core Inflation, which excludes the costs the impact of a worldwide slowdown in of accommodation and private road transport, electronics demand and a pullback in global eased to 0.5% in 2015, from 1.9% in 2014. This oil exploration and production expenditures, was mainly due to the sharp decline in the cost respectively. Financial services also turned of oil-related items amid weaker global oil prices. in a more modest performance, though still The disinflationary effects of budgetary1 and other stronger than the rest of the economy, as loan one-off measures2, as well as the more modest growth to East Asia and the domestic trade- pass-through of cost increases to consumer prices, related industries eased. Industries dependent also contributed to lower core inflation last year. on domestic demand likewise slowed, in part due to continued weakness in private sector CPI-All Items inflation moderated to −0.5% in construction and softer demand for real estate 2015, from 1.0% in the preceding year, reflecting business services. the more gradual increase in core consumer prices as well as the dampening effects of lower Growth momentum in the Singapore economy accommodation and private road transport costs. eased at the start of this year, coming in at 0.2% Car prices and housing rentals softened alongside on a q-o-q SAAR basis in Q1 2016, after an an expansion in Certificate of Entitlement (COE) expansion of 6.2% in Q4 2015. The subdued quotas and the completion of a large number of outturn stemmed largely from a cyclical pullback residential units last year. in the financial services sector, following a surge in Q4 2015 when fees and commissions were paid out for the year. Softening regional MAS Core Inflation, trade flows also weighed on the trade-related which excludes the services. In comparison, the manufacturing costs of accommodation and private road sector saw a rebound on the back of a boost transport, eased to to output in the pharmaceutical segment. Meanwhile, a pickup in non-residential building 0.5% in 2015, activities shored up growth in the domestic- from 1.9% in 2014 oriented sectors.

Looking ahead, the Singapore economy In the first quarter of 2016, core and overall is expected to continue on a modest and inflation diverged. MAS Core Inflation uneven growth path, with further uncertainty picked up to 0.5% from 0.2% in Q4 2015 as arising from recent developments in the UK temporary disinflationary influences, such as and the Eurozone. Nonetheless, domestic- the enhanced medication subsidies introduced oriented sectors will remain generally resilient, at the beginning of 2015, abated. CPI-All Items buttressed by steady demand for services, inflation remained on a downtrend, falling to such as healthcare and education. For 2016 as −0.8% in Q1 2016 from −0.7% in the previous a whole, the Singapore economy is projected quarter, as a result of larger declines in housing to expand by 1–3%. rentals and car prices (see Chart 2).

1 The budgetary measures include medical subsidies under the Pioneer Generation Package, the reduction in the concessionary foreign domestic worker levy, as well as the abolition of national examination fees for Singaporeans. 2 These include SG50-related price promotions as well as temporary supermarket discounts in the second half of 2015.

Annual Report 2015/16 23 ANCHOR OF ECONOMIC AND FINANCIAL STABILITY

Chart 2: Contribution to CPI-All Items Inflation

3

2

1

0

-1

-2

Looking ahead, external sources of inflation are disinflationary effects of lower oil prices, as well likely to remain subdued, given ample supply as budgetary and other one-off measures. buffers in the major commodity markets and weak global demand. Notably, global oil prices Singapore’s monetary policy was eased in a are expected to average lower for the whole calibrated manner, in line with the changing of 2016 compared to 2015. On the domestic macroeconomic environment. Having already front, softer employment conditions will lead reduced the rate of appreciation of the Singapore to a slowdown in wage growth. In addition, the dollar nominal effective exchange rate (S$NEER) pass-through of domestic costs to consumer policy band in an off-cycle move in January 2015, prices will be constrained by the subdued MAS maintained the policy stance in April last economic growth environment. year. In October 2015, MAS eased policy further by reducing the rate of appreciation of the policy MAS Core Inflation is expected to pick up band slightly, in view of reduced price pressures gradually over the course of this year, reflecting alongside a weaker growth outlook. the diminishing drag from oil prices as well as from budgetary and other one-off measures. Going into 2016, MAS assessed that the tightness However, this increase will be milder than earlier in the labour market had eased, and MAS Core anticipated, reflecting the weaker external price Inflation was expected to pick up more gradually outlook and domestic growth prospects, as than earlier anticipated. At the same time, core well as reduced tightness in the labour market. inflation was likely to average below 2.0% over the medium term. Singapore’s GDP growth Meanwhile, the drag to CPI-All Items inflation outlook had also moderated against a less from non-core components of the CPI basket is favourable external environment. Accordingly, in expected to intensify this year, as a large supply of April 2016, MAS set the rate of appreciation of car COEs and residential units comes on-stream. the S$NEER policy band at zero percent. There was no change to the width of the band and the level at which it was centred. This was not MONETARY POLICY a policy to depreciate the domestic currency, but a measured adjustment following the policy In 2015, GDP growth in the Singapore economy easing undertaken last year, and will ensure slowed to 2.0% from 3.3% in 2014. CPI-All Items price stability over the medium term. Chart 3 inflation turned negative and MAS Core Inflation traces the evolution of monetary policy against moderated to 0.5% from 1.9% in the previous the backdrop of changes in key macroeconomic year. The decline in core inflation was due to the variables in recent years.

24 Monetary Authority of Singapore ANCHOR OF ECONOMIC AND FINANCIAL STABILITY

Chart 3: Key Macroeconomic Variables and the Monetary Policy Stance

Neutral Neutral Modest & Gradual Appreciation 116 Policy Policy

116 Neutral Shift to Modest & Modest & Gradual Appreciation ) Policy 0 112 Gradual S$NEER 0 Reduce 1 Appreciation & = 112 Slope 0

1 Re-centre Reduce Slope

0 108

2 Slightly

1 108 Q (

x 104 e Maintain Maintain

d 104 n

I Re-centre 100 Increase Slope 100 Increase Slope Slightly Slightly & Restore Reduce Set Slope & Widen Band Narrower Band Slope to 0% 96 5 4

4 Output Gap P P

D 3 G

l 3 a i t Output Gap n

e 2 t 2 o P f % of Potential GD o 1 1 % 0 0 -16 6

4 4 CPI-All Items Inflation %YOY Y 2

YO 2016 2 Q1: % 0.5% MAS Core Inflation 2016Q1: 0 0.5% 0 -0.8%

-2

-210 20 Real GDP Growth 8 16 6

Y 12 %YOY

O 4 Y

% Real GDP Growth 2016 8 Q1: 2 1.8%

4 0 2016Q1: 2011 2012 20132 014 2015 2016Q1 1.8% 0 2010 2011 2012 2013 2014 2015 2016Q1

Annual Report 2015/16 25 ANCHOR OF ECONOMIC AND FINANCIAL STABILITY

MACROPRUDENTIAL POLICY property market carefully for risks to financial stability and take appropriate measures to Since 2009, MAS has introduced a series of maintain a stable and sustainable market. measures to ensure stability in the property market and to encourage financial prudence among borrowers. Private residential property New private housing loans prices have declined gradually. From the peak with loan-to-value ratios in Q3 2013, overall prices have declined by an above 70% fell from average 0.9% each quarter over 10 consecutive 77% in Q2 2010 to quarters. Alongside the gradual moderation in prices, transaction volumes – across new sales, below 60% resales and subsales – have declined and remained in Q1 2016 subdued. The current transaction activity is less than half of that seen between 2010 and 2012. As a result, the growth in housing loan volumes has continued to moderate and the risk profile of MANAGEMENT OF LIQUIDITY housing loans has improved. ENHANCING MAS’ STANDING FACILITY

From the peak in Q3 2013, As part of ongoing efforts to enhance MAS’ liquidity overall private residential 2013 facilities, the range of acceptable collateral at property prices have MAS’ Standing Facility was further expanded in declined by an average May 2015 to include Singapore statutory board debt securities and Japanese Yen cash under the MAS- 0.9% each quarter BOJ cross-border collateral arrangement (CBCA).

Singapore Statutory Board Debt Securities The average tenure of new loans has declined from With the inclusion of SGD debt securities issued 30 years in 2012 to 25 years in Q1 2016. The share by Singapore statutory boards as eligible collateral of new private housing loans with loan-to-value for MAS’ Standing Facility, banks can now hold a ratios above 70% fell from 77% in Q2 2010 to broader pool of high quality SGD assets to meet below 60% in Q1 2016. The improvement in loan their liquidity needs in times of stress. profile underpins the banking system’s resilience to risks arising from the property market. The rise Japanese Yen Cash Under MAS-BOJ CBCA in mortgage rates remains manageable for the MAS enhanced the MAS-BOJ CBCA to allow majority of households and does not pose significant banks in Singapore to pledge Japanese Yen cash repayment risk for banks’ housing loan portfolios. at MAS’ Standing Facility to obtain SGD liquidity. Our stress test shows that the banking system would This is in addition to the Japanese Government be able to withstand a stress scenario that includes Bonds and Japanese Treasury Discount Bills a sharp correction in property prices. that are already accepted under the CBCA. This collaboration reinforces the commitment of MAS The measured decline in property prices and BOJ to support the long-standing economic suggests a benign scenario with property prices and financial relationship between Singapore settling at sustainable levels over time. MAS and Japan. remains vigilant for signs of renewed froth in the property market on the back of still-elevated RENEWAL OF THE MAS-PEOPLE’S BANK OF prices in certain market segments. At the same CHINA CURRENCY SWAP time, uncertainties in the financial markets and headwinds in the external outlook could MAS renewed the bilateral currency swap add to risks of a sharper-than-warranted price arrangement with the People’s Bank of China correction. MAS will continue to monitor the (PBC) in March 2016 for a further term of

26 Monetary Authority of Singapore ANCHOR OF ECONOMIC AND FINANCIAL STABILITY three years. The original arrangement was held. Such currency movements will result in established in 2010 and first renewed in 2013. translation effects in MAS’ financial statements. The arrangement is a key pillar of cooperation These translation effects have no impact on between MAS and the PBC to strengthen the international purchasing power of the OFR, economic resilience and financial stability. and hence do not affect MAS’ ability to conduct Under the arrangement, up to RMB 300 billion is exchange rate policy or provide a buffer in the event available to eligible financial institutions operating of a sharp deterioration in Singapore’s balance of in Singapore. The arrangement enhances banks’ payments. Accordingly, it would not be meaningful confidence in carrying out their business in the to hedge against the SGD to mitigate currency two markets, and enables both central banks translation effects. to provide foreign currency liquidity to stabilise financial markets. The arrangement is part of the INVESTMENT PERFORMANCE initiatives announced at the 12th Joint Council for Bilateral Cooperation in October 2015, Chart 4 shows the investment performance of the to broaden the cross-border RMB channels OFR for the last five financial years. The gains/ between Singapore and China. losses of OFR, as represented by the gold bars in Chart 4, comprise two separate components – investment gains/losses (blue bars) and currency MANAGEMENT OF OFFICIAL translation effects (grey bars). Holding the SGD FOREIGN RESERVES exchange rate constant to strip out currency translation effects, the OFR recorded an investment As at 31 March 2016, MAS held S$332 billion gain of S$5.2 billion in FY 2015/16. As in previous (US$246 billion) of official foreign reserves (OFR) years, the investment gain was mainly from interest on its balance sheet. income and realised capital gains from the sale of OFR assets. The investment gain was, however, MAS invests the OFR conservatively in a well- lower compared to prior years due to higher diversified portfolio of cash, bonds and equities valuation provisions. The increase in provisions was that seeks to achieve good long-term returns. due mainly to the market values of some equity The portfolio is diversified across advanced and securities in MAS’ portfolio falling below cost, as emerging market economies, with investment- global equity markets declined in FY 2015/16. grade bonds in the advanced economies comprising the largest allocation in the portfolio. In FY 2015/16, the currency translation effect About three-quarters of the OFR are denominated was negative due primarily to the strengthening in the G4 currencies i.e. USD, EUR, JPY and GBP. of the SGD against the USD and the GBP. The Within the G4 currencies, the USD forms the exchange rate movements of the SGD against bulk. Diversification across markets, assets and the G4 currencies for the last five financial years currencies helps to enhance the resilience of MAS’ are shown in Table 1. portfolio across various market conditions. Taking the investment gains/losses together with In MAS’ financial statements, the OFR are the currency translation effects, MAS’ annual gains/ accounted for on a lower of cost and market losses3 from OFR over the last five financial years valuation basis. A valuation provision is made ranged from –S$10.1 billion to S$16.5 billion. against investment gain when the market value of an OFR asset falls below cost. An unrealised gain is not recognised when the market value of an OFR asset rises above cost.

MAS’ financial results are reported in SGD. The reported value of the OFR hence depends on the exchange rate movements of the SGD vis-à-vis the foreign currencies in which the reserves are

3 Gross of investment, interest and other expenses.

Annual Report 2015/16 27 ANCHOR OF ECONOMIC AND FINANCIAL STABILITY

Chart 4: Gains/Losses of the OFR

20.0 16.5

12.7 10.6 10.4 9.4

5.9 5.2 3.4 1.2 1.9 0

-3.3 Gains/Losses of OFR (S$’b) -9.3 -10.1 -9.2

-19.5 -25.0 FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16

Investment Gains/Losses Currency Translation Effects Gains/Losses of OFR

Table 1: Exchange Movements of SGD against G4 Currencies (%)

SGD4 vs. FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16

USD 0.3 1.4 -1.4 -8.3 1.9

EUR 6.8 5.3 -8.3 17.6 -4.0

JPY -0.4 16.0 7.9 6.7 -4.5

GBP 0.6 6.6 -10.1 3.0 5.2

4 Positive figures represent an appreciation of the SGD, while negative figures represent a depreciation of the SGD against the foreign currency over the financial year.

28 Monetary Authority of Singapore ANCHOR OF ECONOMIC AND FINANCIAL STABILITY

Annual Report 2015/16 29 ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

30 Monetary Authority of Singapore Annual Report 2015/16 31 ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

A ROBUST FINANCIAL CENTRE

INDUSTRY TESTS

Industry-Wide Stress Tests MAS conducts annual industry-wide stress tests of financial institutions in Singapore. In 2015, the macroeconomic stress scenario applied across the financial industry incorporated a weakening of the external economic environment stemming from a more aggressive than expected rise in the Participants sharing their cyber strategies with Dr Yaacob US policy rate, prolonged slowdown in China, and Ibrahim, Minister for Communications and Information and recession in core Eurozone and Japan. This in turn Minister-In-Charge of Cyber Security triggered a slowdown in Singapore’s economic growth, including a property market correction. from cyber attacks. During the TTX, key financial Direct insurers were also subject to insurance- institutions tested their cybersecurity measures specific stress scenarios such as a flu pandemic. and recovery plans across a range of cyber threat The stress tests showed that Singapore’s financial scenarios, including the sector’s ability to execute system would remain resilient under the stress a coordinated response. MAS will continue to work scenario. As with previous years, MAS shared with various stakeholders to further strengthen the the stress test results with participating financial sector’s cyber resilience. institutions, and engaged them on their results and actions to mitigate the effects from plausible ENHANCING THE RESOLUTION REGIME risk events. In June 2015, MAS published a policy consultation Cybersecurity Table-Top Exercise on proposals to enhance MAS’ resolution regime Cyber Security Agency and MAS jointly organised to promote the orderly and efficient resolution of and conducted a table-top exercise (TTX) in May distressed financial institutions, taking into account 2015 to assess the financial sector’s capabilities the Financial Stability Board (FSB)’s Key Attributes of and readiness to detect, respond and recover Effective Resolution Regimes for Financial Institutions and circumstances in Singapore. MAS proposed recovery and resolution planning requirements for financial institutions that are systemically important or that perform critical functions. These financial institutions are also required to adopt measures to address deficiencies in their recovery plans, and remove impediments to resolvability.

To facilitate orderly resolution, MAS proposed to have powers to impose temporary stays on early termination rights of financial contracts. Temporary stays can also be applied to contracts that are non- financial in nature, but that are necessary to ensure Participants united in response to simulated cyber attacks continuity of essential services and functions of

32 Monetary Authority of Singapore ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE a financial institution. We also proposed to have Enhancing Regulatory and Licensing powers to recapitalise a financial institution by Frameworks writing down its unsecured subordinated creditor MAS continues to review and enhance our regulatory claims or by converting them into equity stakes in framework for banks, benchmarking it against the financial institution. international standards. In 2016, MAS proposed amendments to the Banking Act to enhance MAS also consulted on a creditor compensation depositor protection by strengthening prudential framework, and proposed to fund costs relating safeguards, corporate governance, and risk to resolution expenses through ex-post funding management controls of banks. The amendment arrangements. Act was passed in Parliament in February 2016.

BANKING In June 2015, MAS also announced that we will remove the accounting divide between the Strengthening Resilience Domestic Banking Unit (DBU) and the Asian In April 2015, MAS issued a framework for Currency Unit (ACU). The DBU-ACU framework identifying and supervising domestic systemically was implemented in 1968 to safeguard financial important banks (D-SIBs) in Singapore, and the stability while facilitating growth of the Asian inaugural list of D-SIBs. D-SIBs are banks that Dollar Market. While it has served us well, recent can have a significant impact on the stability of the developments have reduced its relevance. financial system and the proper functioning of the Regulatory developments since the global broader economy. D-SIBs are required to comply financial crisis have broadly aligned the rules that with policy measures to address the risks that they govern banks’ offshore activities and those for can pose. These include local incorporation of domestic banking businesses in Singapore. We will retail operations for foreign bank branches with a therefore remove the DBU-ACU divide to reduce significant retail presence, higher loss absorbency, administrative burden on banks. recovery and resolution planning, and liquidity coverage ratio requirements. MAS has streamlined the bank licensing framework by phasing out the Offshore Bank In 2015, MAS conducted a thematic inspection licence. The revised two-tier licensing framework of several banks in Singapore to assess the distinguishes between Full Banks with access credit underwriting standards and practices of to the retail market and Wholesale Banks that their corporate lending business. Overall, we specialise in wholesale business. MAS has observed that the banks’ underwriting standards stopped issuing Offshore Bank licenses since and practices were generally sound, though there April 2016, and we will convert all existing were areas for improvement. In February 2016, Offshore Banks to Wholesale Banks over time. we issued an information paper to share our observations from the thematic inspection with INTERNATIONAL SUPERVISORY the industry. COOPERATION

Introducing Countercyclical Capital Buffer Consolidated Supervision and Cooperation MAS introduced the Countercyclical Capital Buffer with Foreign Regulators (CCyB) on 1 January 2016. The CCyB is a part of MAS continues to participate in several insurance the Basel III capital framework, and is intended to group supervisory colleges as host supervisor. mitigate pro-cyclicality and protect the banking Participation in these meetings strengthens MAS’ sector during stress periods. MAS supports cooperation with the home supervisors of foreign the Basel Committee on Banking Supervision’s insurers. It also allows MAS to better understand objective to address the build-up of systemic the activities of the insurance groups in other risks from excessive broad-based credit growth, jurisdictions which may have an impact on their and has included the CCyB in its macroprudential operations in Singapore. toolkit. Based on prevailing economic and financial conditions, we have set a CCyB rate of 0% for MAS also participates in supervisory college Singapore. meetings of international and regional banks.

Annual Report 2015/16 33 ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

MAS hosted the 2015 APAC Recovery and Industry Council (SIC), MAS revised the Singapore Resolution Planning Workshop for UBS and Code on Take-overs and Mergers to keep pace with Credit Suisse, two Global Systemically Important market developments and evolving international Banks (G-SIBs), from 13 to 14 August 2015. practices. The key amendments included providing The workshop facilitated information exchanges greater clarity on the applicable procedures and between home and host supervisors to support timelines for competing offers and the conduct of recovery and resolution planning of these banks. a company’s board of directors when faced with In addition, MAS and the ECB Joint Supervisory an offer. SIC will continue to review take-over rules Team hosted the annual Deutsche Bank APAC- and practices to ensure the regime is in line with Americas supervisory college in Singapore for international best practices. non-EU supervisors from 23 to 25 November 2015. Market Structure and Practices MAS is also a member of the LCH supervisory The minimum trading price requirement of 20 cents college. The college, chaired by the Bank of for Mainboard listed issuers was introduced on England, discusses supervisory issues pertaining 1 March 2015. The Singapore Exchange (SGX) to LCH’s operations in the various jurisdictions. continued to work closely with affected Mainboard companies to explore options to meet the minimum Crisis Management Group Meetings trading price of 20 cents. The objective of the MAS is a member of the Crisis Management requirement is to improve the overall quality of the Group (CMG) of six of the G-SIBs that have securities market and address risks of low-priced significant operations in Singapore and securities being more susceptible to excessive participates in their CMG meetings. The meetings speculation and potential market manipulation. facilitate information exchanges between home and host authorities and the establishment of Other securities market initiatives, which were institution-specific cross-border cooperation extensively consulted in 2014, will be introduced agreements to support recovery and resolution in phases, with intervals of at least six to 12 planning. They enhance preparedness and months between major initiatives. Short position cross-border coordination for crisis management, reporting will be introduced in 2017, followed by including recovery and resolution planning, for collateralised trading in 2018. This will provide these institutions. market participants with adequate time to adjust to the changes, and also allow MAS and SGX MAS is also a member of the CMG of one Global to work closely with the industry to educate the Systemically Important Insurer (G-SII) and a investing public of the upcoming initiatives. member of the sub-CMG of one G-SII. MAS has completed a review of the self-regulatory SECURITIES, FUTURES AND OVER-THE- roles performed by exchanges. Starting from 2016, COUNTER DERIVATIVES MAS will be primarily responsible for supervision and inspection of exchange members’ compliance Crowdfunding for Small and Medium with statutory requirements. Exchanges will Enterprises continue to supervise their members for risk In June 2016, MAS published its responses to management and operational requirements. the feedback received from a public consultation This arrangement will lead to greater supervisory on facilitating securities-based crowdfunding efficiency and effective oversight of risks posed by (SCF). MAS’ responses seek to help start-ups, intermediaries. and small and medium enterprises access alternative methods of raising funds through MAS will also enhance our surveillance capabilities SCF, while ensuring that there are sufficient to monitor trading activities within and across safeguards for investors. exchanges to detect potential misconduct and market abuse. The new surveillance capabilities Amendments to the Singapore Code on Take- will facilitate early detection of misconduct, and overs and Mergers support more expedient investigations and tough In February 2016, on the advice of the Securities enforcement actions.

34 Monetary Authority of Singapore ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

As the sole securities exchange operator, SGX gained the requisite recognition from both EU will retain its role as listing authority. This role and US authorities. In addition to the Singapore has been enhanced with the 15 September Exchange Derivatives Clearing Limited (SGX-DC) 2015 establishment of the SGX Listings Advisory being registered with the US Commodities Futures Committee, Listings Disciplinary Committee and Trading Commission as a Derivatives Clearing Listings Appeals Committee to strengthen the Organisation since December 2013, SGX-DC and listing policymaking and review process, and ICE Clear Singapore were also recognised by the enhance how Listing Rules are enforced. European Securities and Markets Authority as eligible third-country CCPs in 2015. In Singapore, Over-The-Counter Derivatives Reforms MAS recognised CCPs from the UK (LCH. MAS remains fully committed to meeting the Clearnet Limited) and US (Chicago Mercantile Group of 20/FSB over-the-counter (OTC) derivative Exchange Inc.) as Recognised Clearing Houses reforms. We have made good progress in in February 2016 and May 2016 respectively. implementing the reforms in Singapore. MAS expects to recognise more CCPs, which will strengthen accessibility to clearing infrastructure MAS expects to complete the mandatory trade from Singapore. reporting requirement by 1H 2017. Following the commencement of the reporting regime for MAS continues to review other aspects of our interest rate and credit derivatives contracts in OTC derivatives regulatory regime, including 2014, banks started the mandatory reporting of conducting an in-depth study on the conditions foreign exchange (FX) derivatives in May 2015. that would be appropriate for a trading mandate In January 2016, MAS consulted on proposals to be implemented in Singapore. to implement the reporting of the remaining asset classes, namely commodity and equity derivatives Financial Market Infrastructure contracts. The consultation also included proposed MAS issued the Notice on Financial Market revisions to fine-tune the reporting obligations Infrastructure (FMI) Standards in August 2015, for certain non-bank financial institutions, while setting out the principles in the Committee maintaining effective data coverage of OTC on Payments and Market Infrastructures derivative activities in Singapore. (CPMI)-International Organisation of Securities Commissions (IOSCO) Principles for Financial MAS issued a public consultation in June 2015 Market Infrastructures (PFMI) for which licensed setting out proposed requirements for the trade repositories and approved clearing houses regulation of OTC derivative intermediaries. In regulated by MAS are required to comply. July 2015, MAS also consulted on mandatory clearing requirements for OTC derivatives. The With the transfer of provisions governing the consultation proposed to start the clearing Central Depository System (CDS) from the mandate with SGD and USD interest rate Companies Act to the Securities and Futures Act swaps, as these are the most widely traded (SFA), MAS issued the Notice on FMI Standards interest rate derivatives in Singapore. Proposals for Central Securities Depositories which sets to implement margin requirements for non- out the PFMI standards for CDS in June 2016. centrally cleared OTC derivatives followed in October 2015. Margin requirements would Supervisory Action complement MAS’ mandatory clearing On 24 June 2015, MAS reprimanded SGX for requirements for OTC derivatives to better lapses related to SGX’s market outages on 5 manage potential systemic risks posed by the November 2014 and 3 December 2014. MAS OTC derivatives sector. also directed SGX to improve its recovery capabilities and processes, including: MAS has also focused on ensuring that the financial market infrastructure is in place to support • Strengthening its monitoring system the OTC derivatives reforms. To ensure that clearing capabilities to allow timely and accurate infrastructures are in place for mandatory clearing, problem identification when incidents central counterparties (CCPs) in Singapore have occur;

Annual Report 2015/16 35 ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

• Strengthening its business continuity bank for insider trading after he traded on price- management and disaster recovery procedures sensitive and non-public information relating to a to improve crisis preparedness; and proposed acquisition. The defendant had acquired this information in the course of his work. He paid a • Improving its crisis communications civil penalty of S$434,912. This case was significant processes to provide prompt information to as the defendant, who also headed the foreign all stakeholders. bank’s investment banking operations at the time of the contravention, was based overseas and had MAS is reviewing SGX’s implementation of the committed the offence of insider trading by trading remedial measures, which have been verified by through his wife’s bank account in Singapore. an independent expert. Until MAS is satisfied with the completion of these measures, SGX will not MAS also took action against two remisiers. The increase fees for the securities and derivatives first case was a civil penalty action against a markets. SGX also contributed S$1 million to its remisier for insider trading after he traded on price- Investor Education Fund. sensitive and non-public information regarding a proposed delisting and cash offer. He paid a civil Review of Regulatory Safeguards for Investors penalty of S$110,000 and was also prohibited To enhance regulatory safeguards for investors from engaging in regulated activities for a period investing in capital markets products, MAS of two years. In the second case, MAS had announced in September 2015 that we will reason to believe that a remisier had engaged in a proceed with proposals to: deceptive act when he traded in a client’s securities accounts for his own benefit. To prevent possible • Extend capital market regulatory safeguards further misconduct, MAS prohibited the remisier to investors in certain non-conventional from engaging in regulated activities for a period investment products that are in substance of two years. capital raising products; and Between April 2015 and March 2016, MAS took • Give investors who meet certain wealth a total of 368 regulatory and enforcement actions thresholds the choice whether to be treated against companies and individuals for breaches as an accredited investor with the consequent under the SFA and the Financial Advisers Act reduction of regulatory safeguards. (FAA). These actions included reprimands, composition fines, civil penalties and prohibition MAS is finalising the legislative amendments to orders. Where they involve significant breaches implement these proposals, following a public of law and regulations in relation to conduct consultation and further engagement with key issues, MAS publishes details of our market stakeholders, for tabling in Parliament in 2H 2016. conduct regulatory actions. In this regard, MAS published a total of eight formal regulatory and ENFORCEMENT enforcement actions against companies and individuals under the SFA and FAA. Enforcement Actions In April 2015, the highest civil penalty quantum ever imposed by MAS in a single case was announced. Between April 2015 and March Civil penalty action was taken against an individual 2016, MAS took a total of and his niece for committing insider trading while regulatory and they were in possession of price-sensitive and non- 368 enforcement actions public information relating to a share acquisition against companies and and a mandatory general offer. The individual had individuals breaching also admitted to false trading contraventions. The the Securities and Futures total civil penalty imposed was S$11,838,000. Act and the Financial Advisers Act In another case, MAS took civil penalty action against a former Managing Director of a foreign

36 Monetary Authority of Singapore ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

SECTORAL SECURITY OPERATIONS CENTRE Risk Based Capital Framework Following the second consultation and first To enhance the overall cyber security situation comprehensive quantitative impact study (QIS) for awareness of the financial sector, MAS has the Risk Based Capital (RBC) 2 framework in 2014, embarked on the implementation of a Sectoral MAS has engaged various stakeholders such as Security Operations Centre (SOC). The SOC will insurers, industry associations, external auditors actively monitor and analyse logs from Critical and actuaries to exchange views on RBC 2. Infocomm Infrastructure Operators (CIIOs) for early warnings of cyber threats targeting the CIIOs. MAS has further refined the proposed RBC 2 framework after reviewing the results of the first QIS INSURANCE and the extensive feedback received. Although the results showed that insurers were well-capitalised, Accident and Health Regulatory Framework some adjustments were needed to avoid any Following the MediShield Life Review unintended consequences. Committee’s recommendation to enhance the regulatory and accountability framework for In particular, asset and operational risk charges Integrated Shield Plans (IPs), MAS worked with have been recalibrated and more diversification the Ministry of Health and life insurance industry benefits recognised. MAS has also widened the to enhance disclosure requirements for insurance criteria for the application of a matching adjustment policies, strengthen protection for policyholders for life business. For cases where a matching and improve the conduct of intermediaries for IPs. adjustment cannot be used, other broader MAS also reviewed the disclosure requirements adjustments that similarly recognise the illiquid for other accident and health policies, including nature of long-term liabilities have been introduced. short term policies. These changes will allow insurers to better carry out their important roles in the economy and society MAS has refined the proposals based on the on a sustainable basis. feedback received from its public consultation on the proposed accident and health regulatory MAS is conducting the third consultation setting out framework. With effect from 1 November 2015: the revised enhancements and second QIS in Q3 2016. Overall, MAS does not expect the insurance • Only Medisave-approved policies may have industry on the whole to hold higher levels of capital the word “Shield” in their product names to under RBC 2. avoid confusion with non Medisave-approved policies; A TRUSTED FINANCIAL CENTRE • Insurance intermediaries are required to understand their clients’ financial commitments PREVENTING MONEY LAUNDERING AND and affordability concerns (including their TERRORISM FINANCING clients’ hospital ward preferences) to help their clients identify the appropriate coverage; Singapore is committed to the global effort to combat transnational crime. Singapore is • Insurance intermediaries are required to a member of the Financial Action Task Force highlight free-look periods, exclusions and (FATF) and a founding member of the Asia-Pacific disclaimers as part of their disclosures; and Group on Money Laundering.

• Insurance intermediaries who provide advice In April 2015, MAS issued a revised set of Notices on IPs need to undergo specific training. and Guidelines to financial institutions on anti- money laundering and countering the financing Certain disclosure requirements for non of terrorism (AML/CFT). These enhancements Medisave-approved policies took effect on reflect MAS’ prevailing supervisory expectations 30 June 2016 to give insurers sufficient time for and are benchmarked to global best practices implementation. and standards.

Annual Report 2015/16 37 ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

In June 2015, the MAS Act was amended to money laundering or terrorism financing, suspicious enhance the effectiveness of Singapore’s AML/ transaction reports should be filed promptly. CFT regime, particularly in relation to international cooperation. The amendments are aligned with the In addition, a few financial institutions did not standards set by FATF and the Core Principles for conduct customer due diligence measures Effective Banking Supervision issued by the Basel commensurate with the risks presented by higher Committee on Banking Supervision. risk businesses or customers. Some financial institutions, particularly money-changers and In October 2015, MAS issued the “Guidance remittance agents, were required to strengthen on AML/CFT Controls in Trade Finance and their customer due diligence processes, including Correspondent Banking” to help financial the documentation of the due diligence done. institutions improve their risk management MAS had required the relevant financial institutions practices in these areas. to promptly address all deficiencies noted and take steps to strengthen their controls and risk MAS has dedicated significant resources towards management framework. AML/CFT supervision and enforcement. In 2015, MAS conducted 54 AML/CFT inspections covering MAS takes a serious view of breaches of AML/ banks, insurance companies, money-changers, CFT regulations and failure by financial institutions remittance agents, capital markets services to institute a robust AML/CFT control framework. licensees, licensed trust companies, stored value Sanctions are imposed on financial institutions for facility holders and non-bank credit card issuers. regulatory contraventions and deficiencies in AML/ MAS also engaged external auditors to conduct CFT measures. These include formal warnings, AML/CFT inspections on 100 money-changers reprimands, restrictions on operations, financial and remittance agents. penalties and revocation of licences. In 2015, MAS issued 19 warnings and reprimands to financial institutions. MAS also imposed financial penalties MAS engaged external on 16 financial institutions with amounts up to auditors to conduct AML/ S$800,000. CFT inspections on 100 money-changers and In 2015, MAS issued 19 remittance agents warnings and reprimands to financial institutions. MAS also imposed financial penalties on16 From these inspections, we found that AML/ financial institutions with CFT controls were generally in place for most amounts up to financial institutions. There was also greater industry awareness of money laundering, terrorism S$800,000 . financing and proliferation financing risks in trade finance and correspondent banking, and controls in these areas had been enhanced. Financial CLOSURE OF BSI BANK LIMITED institutions had also incorporated “high tax risk” indicators in their customer due diligence policies, In June 2016, MAS withdrew its approval for BSI Bank procedures and controls. to operate as a merchant bank in Singapore due to serious breaches of AML requirements, extensive However, there were several areas for improvement. control failures, ineffective senior management MAS has asked financial institutions to continue to oversight, and acts of gross misconduct by certain strengthen their transaction monitoring systems bank staff. The last time MAS shut down a merchant to ensure that they are able to detect unusual and bank was in 1984, 32 years ago. In addition, MAS suspicious trends, patterns and activities over time. imposed a financial penalty of S$13.3 million for 41 These systems should also be enhanced to monitor breaches of AML regulations. MAS also referred six activities in multiple accounts belonging to the members of the bank’s senior management and staff same beneficial owner. Where there is suspicion of to the Public Prosecutor to evaluate if there were

38 Monetary Authority of Singapore ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

criminal offences committed by these individuals. and committed to implementing AEOI by 2018. In taking these actions, MAS reminded financial Legislative amendments will be made by the end of institutions to take their AML responsibilities seriously, 2016. Singapore will explore entering into bilateral and that MAS is resolved to ensure that Singapore AEOI arrangements with appropriate partners, remains a clean and trusted financial centre. subject to:

• Partners having a robust framework of law In June 2016, MAS withdrew to maintain the confidentiality of information its approval for BSI Bank exchanged and confine its use for tax Limited to operate as a merchant bank in purposes; Singapore. The last time MAS shut down a merchant • AEOI being implemented among all key bank was in 1984, 32 years ago. financial centres to create a level playing field; and

ENHANCING EXCHANGE OF TAX • Reciprocity in terms of the scope of information INFORMATION FRAMEWORK exchanged between jurisdictions.

Singapore continued its efforts to promote international tax transparency to combat cross- A DYNAMIC AND PURPOSEFUL border tax offences. The first transmission of FINANCIAL CENTRE information under the Foreign Account Tax Compliance Act Model 1 Intergovernmental FINANCIAL SECTOR GROWTH REMAINS Agreement between Singapore and the US took RESILIENT place in September 2015. The Singapore financial sector remained resilient In January 2016, Singapore ratified the Convention in 2015, growing 5.3% compared to GDP growth on Mutual Administrative Assistance in Tax Matters. of 2% for the overall economy. The multilateral agreement expands Singapore’s network of partners for exchange of information The Singapore financial on request to over 100. sector remained resilient in 2015, growing Singapore also endorsed the new global standard of Automatic Exchange of Information (AEOI) 5.3%

DEDICATED DEPARTMENTS TO COMBAT MONEY LAUNDERING AND STRENGTHEN ENFORCEMENT BOX 1 On 13 June 2016, MAS announced that it would set up dedicated departments to combat money laundering and strengthen enforcement.

The Anti-Money Laundering Department will streamline the existing responsibilities for regulatory policies relating to money laundering and other illicit financing risks. A dedicated supervisory team will also be set up to monitor these risks and carry out onsite supervision of how financial institutions manage these risks. These functions used to be carried out by different departments in MAS; the new structures will enhance supervisory focus.

The Enforcement department will continue to jointly investigate capital markets misconduct offences with the Commercial Affairs Department. It will also be responsible for enforcement actions arising from regulatory breaches of MAS’ banking, insurance and capital markets regulations.

The changes will take effect on 1 August 2016.

Annual Report 2015/16 39 ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

Some key highlights include: STRENGTHENING CAPITAL MARKETS AND INCREASING PRODUCT DIVERSITY Banking Total assets in the banking sector held steady at Capital Markets S$2.3 trillion, while trade financing declined on In 2015, SGD outstanding debt volumes remained the back of a slowdown in the Chinese economy resilient with a growth rate of 8.5% while non- and a moderation in trade flows. SGD outstanding debt volumes saw a modest fall of 2.4%. The bond market continued to grow Asset Management in diversity. DBS issued the first covered bond in Singapore’s asset management industry Singapore in USD, while UOB became the first posed 9% growth in 2015, with assets bank in Asia to issue a EUR covered bond in under management reaching S$2.6 trillion. March 2016. UOB was also the first global issuer Approximately 80% of these assets were to publish its Harmonised Transparency Template sourced from investors outside of Singapore, under the Global Covered Bond Label Initiative5. while two-thirds were invested into the Asia Pacific, reflecting Singapore’s role as a regional Real Estate Investment Trust Market investment gateway. In July 2015, MAS refined its proposals to strengthen Singapore’s real estate investment trust (REIT) market, in response to industry feedback. Singapore’s asset The enhancements aim to accord REIT unitholders management industry better protection and greater accountability, while grew 9% in 2015, providing REIT Managers increased operational with assets under flexibility. The enhancements will be phased in to management reaching facilitate smooth implementation by the industry. S$2.6 trillion As of December 2015, there were a total of 39 REITs and property trusts listed on SGX, with a market capitalisation of more than S$65 billion. Insurance Foreign Exchange, Commodities and Derivatives Despite the challenging market conditions posed Singapore continued to grow as a trading hub for by excess capacity and low investment returns, FX, commodities and derivatives. total non-life gross written premiums grew by 10.4% y-o-y in 2015 to reach S$13.4 billion. Average daily OTC turnover of FX reached This was driven by good growth in the offshore US$401 billion in October 20156. This was business, which grew by 13.8% and raised a 5% increase from US$381 billion in April the share of offshore non-life insurance to 68% 2015, led by growth in FX and cross currency in 2015. swaps. In response to greater demands for risk management and market transparency, total Total non-life gross written volume of listed FX, commodity and equity premium grew by 10.4% derivatives in Singapore increased by 53% y-o-y y-o-y in 2015 to reach to reach 180 million contracts in 2015. S$13.4 billion, driven by good growth in Average daily the offshore business over-the-counter turnover of foreign exchange reached US$401 billion in October 2015

5 The Covered Bond Label is a market benchmark enhancing transparency of covered bonds by establishing core standards for covered bonds (https://coveredbondlabel.com/). 6 Singapore Foreign Exchange Market Committee Survey on over-the-counter market activity.

40 Monetary Authority of Singapore ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

• Growth in listed FX derivatives was driven by At the same time, Singapore and China also the Indian Rupee (INR) futures contract, which agreed to enhance capital market cooperation, grew six times in 2015 to over four million which adds a new dimension to bilateral financial contracts being traded. cooperation. Specifically, there was agreement to institute a regular high-level dialogue between • In commodity derivatives, the volume of MAS and the China Securities Regulatory cleared iron ore derivatives doubled to Commission (CSRC). MAS and CSRC also six million contracts, while the volume of agreed to explore product collaboration to benchmark rubber futures traded grew 34% to broaden capital market offerings. The first 650,000 contracts over the year. SGX launched MAS-CSRC Regulatory Roundtable was held Liquefied Natural Gas (LNG) derivatives in on 28 April 2016. January 2016 to facilitate risk management of physical LNG trading. STRENGTHENING INFRASTRUCTURE FINANCING In November 2015, ICE Futures Singapore and ICE Clear Singapore commenced operations, While the pace of growth has moderated, broadening the suite of listed derivatives products population growth in ASEAN will still require in Singapore and strengthening Singapore’s value about US$60 billion worth of investment into proposition as a risk management hub. basic infrastructure each year. To meet the growing need for infrastructure financing, MAS Bond Trading Platform is actively consulting the industry on the setup of MAS recognised SGX Bond Trading Pte Ltd an infrastructure debt takeout facility to improve (SGX-BT) as a Recognised Market Operator in institutional investors’ access to infrastructure November 2015. The electronic bond trading debt investment opportunities. We will also seek platform facilitates price discovery and trade to create usable infrastructure asset performance matching for dealers and clients. SGX-BT benchmarks to encourage greater investment aims to improve liquidity in the trading of Asian allocation into infrastructure, and enhance project bonds by aggregating liquidity providers on its bankability through promulgating consistent platform. project documentation (see Box 3).

ENHANCING THE RMB ECOSYSTEM HARNESSING TECHNOLOGY AND INNOVATION

At the occasions of the 12th Joint Council for Financial Sector Technology and Innovation Bilateral Cooperation in October 2015 and Scheme President Xi Jinping’s visit to Singapore in In June 2015, MAS launched the Financial Sector November 2015, MAS announced key RMB Technology & Innovation (FSTI) scheme, which initiatives to further strengthen RMB cooperation would commit S$225 million over five years to with China. These initiatives include: support the creation of a vibrant ecosystem for innovation. FSTI funds can be used for three • Extending existing cross-border RMB purposes: initiatives7 to the cities of Chongqing, Suzhou and Tianjin; • Innovation centres: To attract financial institutions to set up their R&D and innovation • Allowing companies in the three cities that issue labs in Singapore RMB bonds in Singapore to fully repatriate the proceeds raised; and • Institution-level projects: To catalyse the development by financial institutions • Doubling Singapore’s quota under the RMB of innovative solutions that have the Qualified Foreign Institutional Investor (RQFII) potential to promote growth, efficiency, or scheme from RMB 50 billion to RMB 100 billion. competitiveness

7 The existing cross-border RMB initiatives include allowing: (i) banks in Singapore to lend RMB to corporates in Suzhou, Tianjin and Chongqing; (ii) corporates in Suzhou, Tianjin and Chongqing to issue RMB bonds in Singapore and to repatriate the proceeds onshore; (iii) equity investment funds in Suzhou, Tianjin and Chongqing to make direct investment in Singapore and the ASEAN region; and (iv) individuals in Suzhou, Tianjin and Chongqing to conduct RMB remittances to settle current account transactions and direct investment in corporates in Singapore. Annual Report 2015/16 41 ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

• Industry-wide projects: To support the ecosystem in Singapore, and to develop building of industry-wide technology strategic projects to accelerate technology infrastructure that is required for the delivery adoption and performance in established of new, integrated services players within the financial sector.

Several financial institutions have already set up The study found that Singapore has the resources their innovation centres or labs in Singapore, some and capabilities to become a Smart Financial under the FSTI, including DBS, OCBC, UOB, Centre, based on benchmarking interviews with Allianz, Aviva, Citibank, Credit Suisse, Metlife, the industry and secondary research. and UBS. To strengthen Singapore’s proposition as a hub for the development, deployment and export of In June 2015, MAS FinTech solutions, MAS will focus on opportunities launched the Financial in know-your-customer solutions, greater use Sector Technology & of Application Programming Interface (API) Innovation scheme, gateways in financial systems, and establishing which would commit innovation laboratories with industry partners and other government agencies. New incentive S$225 million schemes will be made available to encourage over five years tosupport more experimentation such as proof-of-concept the creation of a vibrant projects and to recognise innovative solutions to ecosystem for innovation industry challenges. As the FinTech ecosystem in Singapore grows and attracts venture capital, there will be more funding options available for start-ups. Development of the FinTech Ecosystem MAS commissioned a study to identify the MAS intends to make Singapore the destination of conditions needed to support a thriving FinTech choice for innovative FinTech companies by easing

FORMATION OF THE FINTECH & INNOVATION GROUP

BOX On 1 August 2015, MAS formed the FinTech & Innovation Group (FTIG). FTIG is responsible 2 for regulatory policies and development strategies to facilitate the use of technology and innovation to better manage risks, enhance efficiency, and strengthen competitiveness in the financial sector.

FTIG comprises:

Payments and Technology Technology Infrastructure Technology Innovation Lab, Solutions Office, which Office, which is responsible which scans the horizon for formulates regulatory for regulatory policies and cutting-edge technologies policies and develops strategies for developing with potential application to strategies for simple, swift safe and efficient technology the financial industry and and secure payments and enabled infrastructures for the works with the industry and other technology solutions financial sector, in areas such relevant parties to test-bed for financial services. as cloud computing, big data, innovative new solutions. and distributed ledgers.

42 Monetary Authority of Singapore ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE the process of starting an innovative financial 2016 respectively. The agreements will enable MAS business. These firms will need a ready pool of and its counterparts in the UK and Australia to skilled FinTech professionals as they grow. MAS will refer to one another innovative FinTech businesses work in conjunction with the industry and academic that would like to enter each other’s market. community to design new curricula and introduce Following the referral, the regulators will support opportunities for internships and attachments to the businesses through the initial discussion meet this demand. phase and provide advice on required licences, thus helping to reduce regulatory uncertainty and Enhancing Payments Efficiency time to market. The agreements also set out how MAS’ vision for Singapore is for a retail payment regulators plan to share and use information on landscape that is swift, simple, and secure – emerging market trends on FinTech. In addition, the where interoperable electronic payment options are MAS-ASIC agreement includes a commitment by accessible to and acceptable by all in Singapore. In both regulators to explore joint innovation projects. 2016, MAS commissioned a study to take stock of Singapore’s payments framework and landscape Singapore FinTech Festival and create a roadmap to achieve our vision. The Mr Tharman Shanmugaratnam, Deputy Prime findings of this study will guide MAS’ payments Minister and Chairman of MAS, launched the strategy in the years to come. inaugural Singapore FinTech Festival, to be held in Singapore from 14 to 18 November 2016, at MAS, together with the Ministry of Finance (MOF), a Singapore FinTech roadshow in New York City is co-leading a government-wide effort to increase on 12 April 2016. MAS also announced the 100 the adoption of electronic payments in Singapore. problem statements submitted by the industry In 2015, MAS and MOF identified two core for the Global FinTech Hackcelerator at a FinTech thrusts: streamlining payment card acceptance event in Singapore on 31 May 2016. The event infrastructure at merchants through unified Points- was attended by more than 1,000 members of-Sale (POS), and enhancing access to real-time of the FinTech community, including bank payments through the Fast and Secure Transfers (FAST) system.

A unified POS would enhance merchant efficiency by simplifying front-to-back process integration and enhance customer experience. Separately, FAST membership has grown from 14 to 19 banks since its launch in 2014, and the limit on FAST transfers has been raised from S$10,000 to S$50,000. This has allowed more people to pay for more transactions in real-time. Mr Tharman Shanmugaratnam, Deputy Prime Minister and Chairman of MAS, launches the inaugural Singapore MAS is also working with the Association of Banks FinTech Festival in New York City on 12 April 2016. Also in Singapore (ABS) to develop a Centralised in photo: Mr Ravi Menon, Managing Director of MAS, and Mr Sopnendu Mohanty, Chief FinTech Officer Addressing Scheme that will allow anyone in Singapore to pay someone else via FAST using only his or her mobile number as a proxy.

Cooperation Agreements with the Financial Conduct Authority and Australian Securities and Investments Commission MAS signed co-operation agreements on FinTech with the Financial Conduct Authority (FCA) and the Australian Securities and Investments The audience at the announcement of the industry problem Commission (ASIC) on 11 May 2016 and 16 June statements for the Global FinTech Hackcelerator

Annual Report 2015/16 43 ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE and investment executives, FinTech start-ups, skills and programmes. In February 2016, we technology experts, and innovation practitioners. announced the formation of the Financial Sector Tripartite Committee (FSTC), bringing together DEVELOPING GLOBALLY COMPETITIVE the industry associations, labour movement and TALENT government to help the financial workforce address the changing needs of the industry (see Box 4). MAS has embarked on several initiatives to The FSTC has also set up the Financial Industry develop a strong pool of future-ready talent under Career Advisory Centre (FiCAC) to facilitate intra the SkillsFuture framework for the financial sector. and cross-sector mobility.

First, to build a pipeline of job-ready graduates, Third, we continue our efforts to build a strong we are strengthening the linkages with tertiary pipeline of Singaporean leaders in finance. In May institutions to enhance the relevance of curriculum 2015, the Asian Financial Leaders Programme and create greater internship opportunities. We was launched by the Singapore Management will be piloting an Earn and Learn Programme in University (SMU) and Temasek Management the area of retail banking to provide polytechnic Services. The Programme will equip finance graduates an opportunity to learn the ropes professionals aspiring to take on C-suite roles in within key retail banks and at the same time gain Asian financial institutions with the knowledge to recognised qualifications. navigate the diverse business, regulatory, and legal environment in the region. The National University Second, we have also put in place initiatives to of Singapore (NUS) had also launched its Asia deepen skills and increase the versatility of our Leaders in Financial Institutions programme in financial sector workforce. To build a deeply skilled September 2015 to contribute towards building workforce, we have launched the Financial Sector a strong network of future financial leaders with Study Awards to support a wider range of specialist global perspective for Asia.

44 Monetary Authority of Singapore ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

UNLOCKING LONG TERM FINANCING FOR INFRASTRUCTURE

BOX Asia’s infrastructure needs are set to rise rapidly over the next decade, nearing US$5.3 trillion 23 by 20258 . To keep up with this immense demand, Asia must unlock new sources of financing and diversify beyond government funding and bank lending.

Institutional investors can be deep sources of long term financing. While infrastructure assets can offer long-dated and inflation-protected returns, many investors have held back due to information asymmetry and lack of access to bankable opportunities.

To develop infrastructure as an investible asset class for institutional investors, Singapore has launched three partnerships to address the key bottlenecks:

Consistent project Creating infrastructure Developing infrastructure documentation and proper asset benchmarks debt as a significant asset risk allocation to improve To allow institutional investors class for institutional bankability to objectively evaluate investors Investors have shied away infrastructure investment To improve institutional from infrastructure projects opportunities, MAS supported investors’ access to due to poorly-structured the establishment of the infrastructure debt in Asia, contracts that leave them EDHEC Infrastructure Institute- MAS is actively consulting exposed to unnecessary Singapore (EDHECinfra). the industry on the setup of non-commercial risks. In EDHECinfra will create usable an infrastructure debt takeout partnership with the World performance benchmarks for facility, which will facilitate the Bank Group and the G20’s privately held infrastructure transfer of infrastructure debt Global Infrastructure Hub, debt and equity investments. from banks to institutional Singapore is promoting These benchmarks aim investors beyond the the adoption of essential to provide investors with greenfield stage. This will contractual clauses and enhanced data on the return also help banks to recycle risk allocation matrices for and risk characteristics, as capital for new greenfield projects in Asia to improve well as facilitate performance investments. the quality of project comparisons of privately held documentation and enhance infrastructure debt and equity bankability. against other asset classes.

8 Source: PwC, July 2015.

Annual Report 2015/16 45 ROBUST, TRUSTED, DYNAMIC AND PURPOSEFUL FINANCIAL CENTRE

FORMATION OF THE FINANCIAL SECTOR TRIPARTITE COMMITTEE

BOX 4

Top row (L-R): Ong Puay See (IBF), Julia Ng (WDA), Sylvia Choo (NTUC), Ong-Ang Ai-Boon (ABS), Leong Sing Chiong (MAS), Vicky Wong (e2i), Carolyn Neo (MAS) Bottom row (L-R): Max Lim (NTUC), Michael Zink (Citi), Wee Ee Cheong (ABS, UOB), Jacqueline Loh (MAS), Patrick Tay (NTUC), Piyush Gupta (DBS), Lim Cheng Teck (SCB), Nora Kang (NTUC) Absent with apologies: Samuel Tsien (OCBC)

In February 2016, MAS and the National Trades Union Congress (NTUC) announced the formation of the Financial Sector Tripartite Committee (FSTC). The FSTC is co-chaired by Ms Jacqueline Loh, Deputy Managing Director, MAS, and Mr Patrick Tay, Assistant Secretary- General, NTUC.

SkillsFuture was first announced by Deputy Prime Minister Tharman Shanmugaratnam in Budget 2015, and it aims to provide Singaporeans with opportunities to develop their fullest potential throughout life, regardless of their starting points. To achieve the SkillsFuture objective, tripartism is key. The FSTC brings together the industry associations, government and labour movement, to build a financial sector workforce that is versatile and well-equipped to embrace the opportunities and changing needs of the financial industry. For a start, the FSTC aims to achieve the following:

Enhance versatility Facilitate mobility Build resilience The FSTC will collaborate with In April 2016, the FSTC set In March 2016, the FSTC the Institute of Banking and up a financial sector-specific partnered NTUC e2i Finance (IBF) to continually one-stop career advisory (Employment & Employability review the IBF Standards and facility known as the Financial Institute) to pilot a change identify new cross-functional Industry Career Advisory management programme that competencies needed, such Centre (FiCAC). Supported will help the financial sector as in data analytics and risk by various agencies, including workforce embrace new management. Structured MAS, IBF and Workforce mindsets towards skills progression pathways Development Agency, FiCAC upgrading. This will strengthen will also be developed for will provide guidance to workers’ motivations to reskill, evolving job segments professionals who are keen upskill and acquire new skills, including Consumer Banking, to join the financial industry, thereby helping to build a to encourage continuous as well as those looking to more resilient workforce that learning and upskilling. move to new jobs within the can adapt quickly as the job industry. roles and technology in the financial services sector evolve.

46 Monetary Authority of Singapore Annual Report 2015/16 47 SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

48 Monetary Authority of Singapore Annual Report 2015/16 49 SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

SERVING THE PUBLIC initiative, the quantity of brand new S$2 notes issued for the 2016 Lunar New Year fell further by MANAGING DOLLARS AND CENTS another 6.2 million pieces (7.4%) from last year.

As at 31 March 2016, the total currency in In June 2016, MAS issued the Splendour circulation was S$39.3 billion (see Chart 5). This of Native Orchids Series coin set as a finale was an increase of 6.4% from a year ago, with to the popular Native Orchids of Singapore S$56.9 billion worth of notes and coins issued coin series issued from 2011 to 2015. The to banks and S$54.5 billion returned for the set, which has a limited mintage of 4,000, financial year. comprises 10 miniature S$1 silver proof coins, each featuring the same species of orchids MAS continued with the “good-as-new” S$2 from the Native Orchids of Singapore coin notes initiative for the fourth year. With this series in full colour.

Chart 5: Total Currency in Circulation S$39.34 Billion S$36.98 Billion S$33.86 Billion

S$31.56 Billion S$28.83 Billion

2012 2013 2014 2015 2016

Total Currency in Circulation (S$Billion) 2012 2013 2014 2015 2016 Notes 27.58 30.27 32.52 35.59 37.89 Coins 1.25 1.29 1.34 1.39 1.45 Total 28.83 31.56 33.86 36.98 39.34

The Splendour of Native Orchids Series Coin Set

50 Monetary Authority of Singapore SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

SG50 COMMEMORATIVE CURRENCY

BOX To celebrate Singapore’s 50th year of independence, MAS issued a set of three commemorative 5 coins in May 2015 followed by a set of commemorative currency notes in August 2015. The commemorative coins consisted of a S$2 cupro-nickel proof-like coin, a S$5 silver proof coin and a S$50 gold proof coin, while the commemorative notes comprised a S$50 polymer note and five S$10 polymer notes. To meet collectors’ demand, a collection of seven limited edition numismatic currency sets was also available for sale.

The coins were themed “Education, Building our Nation Together”, reflecting the fundamental role that education played in the transformation of a young nation. The S$50 note highlights Singapore’s history, transformation and future. The five S$10 notes have a common front design and different back designs, each reflecting a value or an aspiration that depicts the theme “Vibrant Nation, Endearing Home”. Both the S$50 and S$10 notes have security features that are the first of their kind in the world to be used in a currency note. MAS won the “Best New Currency Feature or Product” award for the lens-based wide security stripes on the S$50 and S$10 notes at the 2016 Excellence in Currency Technical Awards by the International Association of Currency Affairs.

Commemorative Coins

S$50 Commemorative Note

S$10 Commemorative Notes

Annual Report 2015/16 51 SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

MONEYSENSE MoneySENSE engaged residents of Moulmein- Kallang and Whampoa at the PAssionArts MoneySENSE, the national financial education Festival in July 2015, and reached out to the programme, equips Singaporeans with the public at the Council for Third Age’s 50plus knowledge and capabilities to make informed Expo in May 2015. Through such community financial decisions. The programme reaches out events, we educated Singaporeans on issues to people from all walks of life through different such as prudent investing and retirement channels and strategies. planning.

Educating the General Public MoneySENSE continued to engage members of the public directly through talks, seminars, workshops and community events. We also ran advertorials in the newspapers, and worked with partners to deliver content through television and radio.

The MoneySENSE-Singapore Polytechnic Institute for Financial Literacy (IFL) conducted MoneySENSE reached out to members of the public at 840 talks and workshops in 2015, educating the PAssionArts Festival in July 2015 more than 26,000 participants on topics ranging from basic money management to retirement Empowering the Youth planning. Since its launch in 2012, the IFL has As we continue to focus on the youth segment, we conducted over 2,400 talks and workshops started the My Money @ Campus seminar series that have benefitted close to 76,000 people. to reach out to tertiary students. The inaugural seminar was held at SMU on 21 October 2015 and attracted about 340 undergraduates. Mr Piyush Gupta, CEO of DBS Group Holdings Ltd, shared his personal investment journey while other industry experts and academics shared tips on how to build an affordable portfolio.

An IFL workshop conducted in September 2015 for staff of the Health Sciences Authority, on how to manage CPF money for retirement

My Money @ Campus seminar at SMU in October 2015. A dialogue with Mr Piyush Gupta, CEO of DBS Group The MoneySENSE-Singapore Holdings Ltd (right), moderated by Assistant Professor Polytechnic Institute for Aurobindo Ghosh from SMU (left) Financial Literacy (IFL) conducted 840 talks and workshops in 2015, educating more than The second My Money @ Campus seminar was held at NUS on 17 March 2016. About 380 26,000 participants students learned the importance of planning

52 Monetary Authority of Singapore SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

ahead and managing investment risks from Mr MoneySENSE also participated in several events Michael Zink, Citi’s Head of ASEAN and Country organised by IHLs to educate their students Officer for Singapore. Given the success of My on money management. We reached out to Money @ Campus seminars, we intend to hold undergraduates at a financial literacy carnival more editions at other universities and institutes organised by the NUS Students’ Union in March of higher learning (IHLs) in the upcoming months. 2015, and supported the MoneySENSE-Central Provident Fund Board Financial Literacy Week organised for Ngee Ann Polytechnic students in November 2015.

MoneySENSE utilised a gamification strategy to educate the young about personal finance in a fun and interactive way:

• We worked with Nanyang Polytechnic and the National Council for Problem Gambling to organise the Singapore Games Creation Competition. More than 500 students from My Money @ Campus seminar at NUS in March 2016. 50 secondary schools as well as the Institute Mr Michael Zink, Citi’s Head of ASEAN and Country Officer for Singapore, addressing the crowd of Technical Education created web-based games and mobile applications with important messages on spending money wisely and the The inaugural My Money dangers of gambling. @ Campus seminar was held at the Singapore • MoneySENSE partnered with Wellington Management University Primary School to organise the National on 21 October 2015 and Primary Games Creation Competition. The attracted about theme of the competition was “A Community undergraduates of Savvy Savers” and key messages in the 340 games included identifying needs and wants. More than 400 pupils from 40 primary schools took part in the competition.

PROMOTING FINANCIAL LITERACY THROUGH ISLAND-WIDE CAMPAIGNS

BOX MoneySENSE conducted three large-scale educational campaigns in 2015. The goals of the 6 campaigns were to:

• Raise awareness of two key initiatives resulting from the Financial Advisory Industry Review (FAIR) – compareFIRST and Direct Purchase Insurance (DPI)

• Encourage consumers to adopt sensible spending and borrowing habits and use unsecured credit responsibly

• Highlight the importance of regular and long term saving and investing, and educate the public on low-cost investment products

To maximise outreach, educational messages were featured on various media platforms, including newspapers, public transport, television, radio, and mobile and online platforms such as Facebook, Google and YouTube. To help the public recall as many of the messages as possible, each campaign featured a distinct theme. (continued on next page)

Annual Report 2015/16 53 SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

PROMOTING FINANCIAL LITERACY THROUGH ISLAND-WIDE CAMPAIGNS continued

BOX “You Can Now Buy Direct” and “Spend Within Your Means” Campaign 6 “Compare First” Campaign The “Spend Within Your Means” campaign compareFIRST is an interactive online ran from July 2015 to October 2015 and portal that enables consumers to compare featured baits modelled after luxury items the premiums, features and benefits of life placed on mousetraps resembling credit insurance products. This helps them make cards. The aim was to encourage consumers more informed decisions about which to watch their spending and use unsecured life insurance policy to buy. DPI offers credit prudently. consumers access to a distinct class of term life and whole life insurance products The campaign tied in with regulatory changes sold directly by life insurers without financial to help consumers avoid debt problems by advice and commissions. limiting the amount of unsecured credit they can take out. The “You Can Now Buy Direct” and “Compare First” campaign ran from April 2015 to August 2015. It encouraged members of the public to visit compareFIRST before making a life insurance purchase and highlighted the key features and benefits of DPI to consumers.

The educational campaign helped register healthy interest in compareFIRST and DPI. As of 31 March 2016, more than 300,000 visitors have used compareFIRST and about 223,000 product summaries have been Advertisements in the newspapers, encouraging consumers to use unsecured credit responsibly downloaded through the portal. In addition, more than 850 DPI policies have been sold. “I Save and Invest for Our Future” Campaign The “I Save and Invest for Our Future” campaign encouraged the public to take a life cycle approach to investing, and highlighted the benefits of saving and investing from young. The campaign, which ran from August 2015 to February 2016, also educated consumers on simple, low-cost investment products such as Singapore Savings Bonds, retail corporate bonds and exchange-traded funds.

Message about compareFIRST on a taxi The campaign included a television commercial showing a man going through different life stages and reaching his goals in life thanks to planning ahead from young.

Educational message on a bus showing an individual going through the different stages of life, and eventually Educational message about DPI at a bus shelter reaping the benefits of saving and investing from young

54 Monetary Authority of Singapore SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

FACILITATING RETAIL ACCESS TO SIMPLE Facilitating Bond Offerings to Retail Investors LOW-COST INVESTMENT PRODUCTS Following public consultations, MAS issued two new regulations on 19 May 2016 to facilitate retail Singapore Savings Bonds investors’ greater access to corporate bonds MAS launched the Singapore Savings Bonds through the Seasoning Framework and Exempt programme in the second half of 2015. The first Bond Issuer Framework: Savings Bond was open for public application on 1 September 2015, and issued on 1 • Under the Seasoning Framework, wholesale October 2015. The public reception has been bonds issued by corporates that satisfy encouraging, with 32,000 individuals investing specified eligibility criteria (such as size, S$810 million in Savings Bonds over the listing track record and credit profile) may be first six issuances from October 2015 to re-denominated into smaller lot sizes after March 2016. This represented a significant the bonds have been listed for six months. increase in retail investors’ participation Eligible corporates will also be exempted in the Singapore Government Securities from providing a prospectus for additional (SGS) market. offers to retail investors of new bonds with the same terms as the re-denominated bonds.

• Under the Exempt Bond Issuer Framework, S$810 million bonds issued by corporates that satisfy even in Savings Bonds stricter eligibility criteria can be offered directly allotted to to retail investors without a prospectus. 32,000 individuals from October • Issuers using these frameworks would still be 2015 to March 2016 required to provide to investors a summary of the key information on the risks and features of the bonds. Singapore Savings Bonds are a new type of SGS that offer individual investors a safe, long-term These frameworks are part of MAS’ overall efforts and flexible product to meet their savings and to give retail investors better access to simple investment needs. investment products that can be used to build their investment portfolio. • Safe: Savings Bonds are fully backed by the Singapore Government. Investors can Improve Retail Access to Exchange always get their investment amount back in Traded Funds full with no capital losses. In April 2015, MAS made changes to its regulatory framework to allow fund managers • Long-term: Savings Bonds have a term of up to re-classify relatively less complex Exchange to 10 years, and pay interest that increases Traded Funds (ETFs) which make limited use of over time. The longer the savings period, the derivatives as Excluded Investment Products higher the return. (EIP). These previously had to be classified as Specified Investment Products and sold to retail • Flexible: Investors may choose to exit their investors with enhanced regulatory safeguards, investment in any given month, with no including requirements for intermediaries to penalties. There is no need to commit to a first assess their investment knowledge or specific investment period at the start. experience in derivatives. As at April 2016, 85% of the total assets under management of MAS will continue with public outreach efforts SGX-listed ETFs were classified as EIP-ETFs, to generate greater awareness of Savings which investors can purchase as easily as Bonds. individual shares.

Annual Report 2015/16 55 SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

PROTECTING CONSUMERS Banning of Short-Term Incentives MAS banned the payment and receipt of short-term FINANCIAL ADVISORY INDUSTRY REVIEW incentives in the FA industry. This will better align the interests of FA firms and their representatives On 11 May 2015, MAS completed the policy and with those of their customers and ensure that FA legislative consultations on recommendations firms and their representatives are not influenced by under the Financial Advisory Industry Review such incentives when recommending investment (FAIR). The objective of FAIR is to raise the products to their customers. standards of the financial advisory (FA) industry and improve efficiency in the distribution Continuing Professional Development of life insurance and investment products MAS prescribed Continuing Professional in Singapore. Development (CPD) training requirements for FA representatives to ensure that they remain current Key changes were made to the FAA, Insurance and up-to-date in their knowledge of market and Act and subsidiary legislation in 2015. The regulatory developments. FA representatives are following initiatives were implemented on 1 required to fulfil a minimum of 30 CPD training January 2016: hours annually, of which 12 hours are to be in Ethics, and Rules and Regulations. Balanced Scorecard Remuneration Framework for Representatives and MAS will monitor the effectiveness of these Supervisors initiatives in meeting the objectives of FAIR. This framework seeks to promote a culture of fair dealing by subjecting a significant proportion ENCOURAGING PRUDENT BORROWING AND of a representative’s remuneration to non- LENDING BEHAVIOUR sales key performance indicators. Under the Balanced Scorecard (BSC) framework, the Implementation of Unsecured Credit Measures representative is assessed based on whether To encourage prudent borrowing, MAS announced he has understood the customer’s needs, in 2013 that financial institutions would be recommended suitable products, made adequate disallowed from granting further unsecured disclosures and conducted himself professionally credit to a borrower if the borrower’s total interest and ethically. There was a one year transition bearing unsecured debt exceeds an industry-wide period from January 2015 for FA firms to borrowing limit for three consecutive months. The familiarise themselves with the BSC requirements, borrowing limit was to be set at the borrower’s before the framework was legally effected on annual income, and was to take effect on 1 June 1 January 2016. 2015. To allow borrowers more time to adjust to the borrowing limit, MAS announced in April 2015 Restrictions on Non-Financial Advisory that it would be phased-in over four years. The limit Activities for Representatives and Standalone was set at an initial level of 24 times a borrower’s Financial Advisory Firms monthly income from June 2015. This will be MAS implemented legislation restricting the lowered progressively to 18 times from June 2017 types of non-FA activities which representatives and 12 times from June 2019. and standalone FA firms may conduct to maintain a high level of professionalism and To help borrowers affected by MAS’ unsecured competence in the FA industry. Any non-FA credit measures, we worked closely with ABS, credit activities conducted by these persons should not card issuers and Credit Counselling Singapore to be in conflict with their FA roles, result in a neglect develop coordinated repayment solutions for these of their FA duties or bring disrepute to the FA borrowers. MAS accompanied the introduction of industry. Representatives are also prohibited from the new measures with an educational campaign conducting moneylending businesses, promoting to help borrowers understand the phasing in of junkets for casinos, acting as real estate agents the borrowing limit and repayment solutions, and and marketing products that are not regulated to educate the public on the consequences of under the FAA as investments. overspending.

56 Monetary Authority of Singapore SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

Enhancement of Credit Information in the PARTNERING ACADEMIA Credit Bureaus MAS has been working closely with the consumer Every year, MAS hosts distinguished academics credit bureaus to enhance information residing with and former senior policymakers under its Eminent them. With effect from April 2015, a borrower’s Visitor Programme and through other platforms. unsecured debt balances are broken down As part of their engagement, these visitors meet into interest bearing and non-interest bearing with MAS’ senior management, deliver lectures, components. The enhanced information empowers and conduct in-house seminars and discussion borrowers and financial institutions to make sessions with MAS staff. more prudent borrowing and lending decisions respectively. In FY 2015/16, MAS welcomed Professor Paul Romer (New York University) and Dr Claudio Resetting of Motor Vehicle Financing Borio (Bank for International Settlements). In their Restrictions lectures, both visitors challenged the conventional In 2013, MAS had re-introduced motor vehicle frameworks used in macroeconomic analysis. financing restrictions as a cyclical response to Professor Romer argued that academic researchers the strong demand for cars and the consequent have increasingly invoked mathematical concepts pressures on inflation. In addition, they serve as with no observable analogues in the real world, and a structural measure to foster financial prudence that such “mathiness” was impeding the progress among borrowers. of macroeconomics as a science. Dr Borio’s lecture explored how prevailing macroeconomic As at Q1 2016, premiums on COEs have fallen frameworks needed to be adjusted to account for significantly and inflationary pressures have the interactions between financial and business receded. The contribution of private road transport cycles. Professor Romer’s lecture was moderated (excluding petrol) to CPI-All Items inflation eased by Professor Lawrence Christiano (Northwestern from +1.3% points in 2011-2012 to -0.5% point University), who also served as MAS Term in Q1 2016. Outstanding motor vehicle loans have Professor in Economics and Finance in FY 2015/16 moderated alongside the fall in demand, declining (see Box 7). by 32% from S$14.13 billion in Q1 2013 to S$9.55 billion in Q1 2016. In view of these developments, MAS reset the financing restrictions in May 2016 by raising the maximum loan-to-value limit and tenure to 70% and seven years respectively. The recalibrated rules will continue to limit excessive borrowing and support the move towards a car-lite society over the long term.

ENHANCING PROSPECTUS DISCLOSURE RULES FOR SECURITIES OFFERS Prof Paul Romer (right) delivers his lecture, moderated by Prof Lawrence Christiano (left) Improving the Readability of Prospectuses On 7 July 2015, MAS published a set of guidelines MAS, together with the NUS Business School on good drafting practices for prospectuses. The and the University of Chicago’s Booth School guidelines encourage and provide guidance to of Business, also invited Professors Barry issuers and their professional advisers on the use of Eichengreen (University of California at Berkeley) plain English and the presentation of information in and Hélène Rey (London Business School) to prospectuses in a clear, concise and logical manner. participate in the 2015 Asian Monetary Policy The guidelines apply to all prospectuses and profile Forum (see Box 8). Professor Eichengreen is statements lodged with MAS from 1 February 2016. the George C. Pardee and Helen N. Pardee Issuers and their advisers are also encouraged to Professor of Economics and Political Science, follow the guidelines’ principles for other types of and an eminent authority on economic history offer disclosure documents. and international economics. Professor Rey is

Annual Report 2015/16 57 SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

well-known for her work on financial imbalances wrote about the nexus between monetary and the international monetary system. and macroprudential policies. Professor Ichiro Sugimoto (Soka University of Japan) presented Following past practice, MAS invited the Eminent newly constructed estimates of Singapore’s GDP Visitors, Term Professors, and other academics and its components for the period 1900–60 in a to contribute articles to its Macroeconomic Special Feature for the Review, and analysed Review. In 2015, Dr Donald Kohn (Brookings the broad trends in the colonial economic data. Institution), former Vice-Chair of the Board of Professor Anthony Tay (SMU) also contributed an Governors of the US Federal Reserve System, article on density forecasting in macroeconomics.

MAS TERM PROFESSORSHIP IN ECONOMICS AND FINANCE AT THE NATIONAL UNIVERSITY OF SINGAPORE BOX 7 Since 2009, MAS has sponsored a Term Professorship in Economics and Finance at NUS. The professorship programme, which was extended for another five years in 2014, appoints top scholars from prestigious universities to teach and conduct research at NUS. It aims to strengthen Singapore’s financial and economic research infrastructure and contribute to a vibrant research community and culture at local universities. Term Professors also meet with MAS’ senior management and conduct discussions with MAS staff. In 2015, Professors Andrew Rose (Haas School of Business, University of California at Berkeley) and Lawrence Christiano (Northwestern University) were appointed Term Professors.

Professor Rose is the Bernard T. Rocca, Jr. Chair in International Business & Trade at Berkeley, and is a world-renowned researcher on open economy macroeconomics. During his appointment, he met with faculty members and taught students through seminars and workshops at NUS. He also engaged senior management at MAS on recent developments in international macroeconomics Prof Andrew Rose (left) interacts with Prof and finance. In addition, he delivered a public Deng Yongheng (right) from NUS during his lecture titled “Domestic Bond Markets and public lecture at NUS Inflation”, which focused on his latest findings on the relationship between inflation and domestic bond markets. Professor Rose also participated in the activities of the Annual Conference of the Asian Bureau of Finance and Economics Research (ABFER), as well as the Asian Monetary Policy Forum (AMPF), which were held in May 2015.

Professor Christiano is the Alfred W. Chase Chair in Business Institutions and Professor of Economics at Northwestern University, and is highly regarded for his ground-breaking work on economic modelling and policy analysis. During his tenure as MAS Term Professor, he interacted with faculty and students at NUS and also delivered a public lecture titled “The Great Recession: Earthquake for Macroeconomics”. The lecture shed light on how the field of macroeconomics has been profoundly affected by the Global Financial Crisis.

58 Monetary Authority of Singapore SERVING THE PUBLIC, ENGAGING STAKEHOLDERS

Annual Report 2015/16 59 VALUED PARTNER ON THE INTERNATIONAL FRONT

60 Monetary Authority of Singapore Annual Report 2015/16 61 VALUED PARTNER ON THE INTERNATIONAL FRONT

INTERNATIONAL FINANCE • Working Group on Supervisory Colleges – MAS co-chairs this working group, which INTERNATIONAL FINANCIAL REGULATORY seeks to strengthen the co-operation REFORMS of home and host regulators in the supervision of internationally active banks; MAS continues to contribute to international work on regulatory reforms as an active member of • Coherence and Calibration Task Force – various committees and standard setting bodies. This task force assesses the coherence of banking sector regulatory reforms Financial Reforms and Implementation and helps inform the BCBS’ measures Monitoring to address excessive variability in risk- MAS has chaired the FSB’s Standing Committee weighted assets, as well as the design on Standards Implementation (SCSI) since 2013. and calibration of the leverage ratio; and In 2015, the key initiatives for SCSI are as follows: • Task Force for Interest Rate Risk in the • Developed the implementation monitoring Banking Book – The task force developed and ‘dashboard’ for the first annual report published the finalised capital framework and to the G20 on the implementation and enhanced supervisory guidance for interest effects of financial regulatory reforms; rate risk in the banking book in April 2016.

• Launched the thematic peer review on • Task Force on Sovereign Exposures – MAS the implementation of the FSB policy also participates in the review of the regulatory framework for shadow banking entities treatment of sovereign risk, which seeks other than money market funds; and to address the risks posed by sovereign exposures and is being conducted in a • Completed reviews on supervisory careful, holistic and gradual manner. frameworks and approaches for G-SIBs, OTC derivatives trade reporting, and resolution Insurance regimes. MAS is actively involved in key committees and working groups of the International Banking Association of Insurance Supervisors, including MAS contributes to the work of the Basel the working group tasked with developing the Committee on Banking Supervision (BCBS) global Insurance Capital Standards, as well through the following: as the FSB’s Insurance Cross-Border Crisis Management Group. • Task Force on the Standardised Approach for Credit Risk – MAS has co-chaired Securities this task force since 2015. The task force At the IOSCO, MAS participates in the standards- reviews the standardised approach for setting work of various Policy Committees, Task credit risk for internationally-active banks Forces and Working Groups. In 2015, we also that are not using the advanced approaches joined the Policy Committee on Enforcement to ensure that credit risk is appropriately and the Exchange of Information, and the newly captured in the capital framework; formed Task Force on Market Conduct.

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Financial Market Infrastructures has continued to participate in the G20 Finance MAS actively participates in the CPMI and is Ministers and Central Bank Governors meetings involved in working groups such as the Working where we contributed to discussions on the Group on Retail Payments and Working Group global economy, financial regulation and stability. on Digital Innovations. As a member of the CPMI- MAS is also an active member of the G20 Green IOSCO Steering Committee, MAS also participates Finance Study Group and G20 International in the various CPMI-IOSCO initiatives, including: Financial Architecture Working Group.

• Co-chairing of the Working Group on Cyber Resilience, which published a set REGIONAL FORUMS of cyber resilience guidelines for FMIs for public consultation in November 2015 ASEAN FINANCIAL INTEGRATION

• Implementation Monitoring Standing MAS actively supports financial integration within Group, which assesses the timely, ASEAN. complete and consistent implementation of the CPMI-IOSCO Principles for FMIs ASEAN Senior Level Committee Under MAS and the Bank of Thailand’s co- • Policy Standing Group, which develops chairmanship of the ASEAN Senior Level policies relating to FMIs Committee, ASEAN central banks and monetary authorities developed Strategic Action Plans for MAS also takes part in the joint Study Group on ASEAN financial integration from 2016 to 2025. Central Clearing Interdependencies (comprising These covered banking integration, financial members from BCBS, CPMI, FSB and IOSCO), services liberalisation, capital account liberalisation, to identify and analyse interdependencies between capital market development, financial inclusion, CCPs and financial institutions. The Study Group payment and settlement systems, and capacity aims to support other international streams of work building. to enhance resilience, recovery and resolvability of CCPs. ASEAN Working Committee on Capital Markets Development INTERNATIONAL COOPERATION MAS chaired the ASEAN Working Committee on Capital Market Development, which seeks MAS participated in the peer review among 28 to promote the development of regional bond jurisdictions with authorities that are members markets. This is complemented by the work of of the FSB, CPMI and/or IOSCO. The peer the ASEAN Capital Markets Forum, where MAS review assessment in 2015 covered authorities’ works closely with fellow securities regulators and implementation of five responsibilities for the private sector to promote the strengthening authorities set out in the CPMI-IOSCO PFMI, and greater integration of regional capital across all FMI types. MAS was assessed to markets. have observed all responsibilities across all FMI types. ASEAN+3

MAS also participated in the BCBS’ Regulatory The ASEAN+3 Macroeconomic Research Office Consistency Assessment Programme as (AMRO) held its official opening ceremony in the an assessor for Mexico and South Korea’s MAS Building on 19 February 2016. implementation of the Basel liquidity coverage ratio. AMRO is the independent macroeconomic surveillance unit of the Chiang Mai Initiative PROMOTING GLOBAL GROWTH AND STABILITY Multilateralisation (CMIM) Agreement, which is a US$240 billion currency swap arrangement among At the invitation of the G20 Chairs, Singapore the Finance Ministries and Central Banks of the

Annual Report 2015/16 63 VALUED PARTNER ON THE INTERNATIONAL FRONT

ASEAN+3 Member States to provide financial In 2015, over 100 participants from 29 countries support in times of liquidity need. AMRO provides attended the 21st and 22nd MAS Banking economic and financial surveillance and analysis Supervisors’ Training Programme, the 6th MAS of the region to support effective decision-making Information Technology Supervision Workshop and for the CMIM. the 9th MAS-Toronto Centre Regional Leadership Programme for Securities Regulators. Close to 100 participants from countries such as Brunei, China, Korea, Myanmar and Vietnam took part in MAS’ in-country training programmes and study visits.

In other technical cooperation programmes, MAS collaborated with partners such as the Lee Kuan Yew School of Public Policy, Civil Service College and South East Asian Central Banks (SEACEN) AMRO Official Opening Ceremony Research and Training Centre. For instance, in April 2015, MAS hosted the 10th SEACEN-BOJ EXECUTIVES’ MEETING OF EAST ASIA-PACIFIC Payments and Settlements System Course CENTRAL BANKS in Singapore. MAS also contributed resource

speakers to various programmes organised by the MAS hosted the 20th Executives’ Meeting of East SEACEN Centre, IMF-Singapore Regional Training Asia-Pacific Central Banks (EMEAP) Governors’ Institute and Financial Stability Institute. and 4th EMEAP Governors-Heads of Supervisory Authorities meeting in Singapore from 29 to 30 May 2015. From 2014 to 2016, MAS was co-vice chair of the Working Group on Financial Markets, and spearheaded work on issues related to recovery and cross-border resolution of financial institutions for the Working Group on Banking Supervision.

TECHNICAL COOPERATION Regional participants and trainers at the 6th MAS Information Technology Supervision Workshop, 16-20 REGIONAL AND BILATERAL TRAINING November 2015, Singapore

MAS contributes to the capacity building of regional IMF-SINGAPORE REGIONAL TRAINING central banks and regulatory authorities through INSTITUTE structured training and technical cooperation programmes. MAS contributes to the funding of the International Monetary Fund-Singapore Regional In July 2015, the Central Bank of Myanmar (CBM) Training Institute (IMF-STI), which is the IMF’s and MAS entered into an MOU that includes training centre in the Asia-Pacific region. The STI technical cooperation and training. MAS hosted furthers the work of the Singapore Cooperation CBM Governor U Kyaw Kyaw Maung to a study Programme, which coordinates the resources visit in August 2015. In February 2016, MAS available in Singapore for technical cooperation conducted a three-day workshop on interbank with other countries. The Institute contributes to markets and banking supervision for over 30 CBM regional growth and stability by providing high- participants in Yangon. quality training on macroeconomic and financial management, and related legal and statistical MAS was invited to share its enterprise risk issues to government officials from the region. management practices at Bank Indonesia’s In 2015, the STI provided training to more than Annual Risk Management Conference in Bali in 800 officials. Over the 18 years since it was September 2015 and with the Autoriti Monetari established, the Institute has provided training to Brunei Darussalam in Brunei in January 2016. more than 10,000 officials from over 40 countries.

64 Monetary Authority of Singapore VALUED PARTNER ON THE INTERNATIONAL FRONT

MAS HOSTS THREE HIGH-LEVEL CONFERENCES

BOX MAS hosted three high-level events in May 2015, which were attended by distinguished 8 academics, central bank governors and heads of supervisory authorities from the Asia-Pacific region. The forums discussed financial and regulatory issues critical to Asia, economic and monetary issues faced in the region, and provided a platform to facilitate research collaboration.

2015 Symposium on Asian Banking and Finance This symposium, co-hosted by the Federal Reserve Bank of San Francisco and MAS for the first time, brought together notable academics and Asia-Pacific CEOs of major financial institutions. Held on 28 May 2015, the discussions covered three main themes:

• Looking back at the global financial crisis and assessing measures taken to strengthen the financial sector • Examining emerging financial system risks and policy responses in the current macro- financial environment • Looking ahead to analyse long-term developments which will shape the opportunities and risks in Asian finance, and how supervisors and central banks should respond

Asian Monetary Policy Forum The Asian Monetary Policy Forum (AMPF) convened for a second year in Singapore on 29 May 2015, in conjunction with the Annual Conference of ABFER. It was co-organised by the NUS Business School, the University of Chicago’s Booth School of Business and MAS.

The conference line-up included prominent speakers such as Mr Tharman Shanmugaratnam, Prof Barry Eichengreen delivers his lecture Deputy Prime Minister and Chairman of MAS, at the Asian Monetary Policy Forum Professor Carmen Reinhart (Harvard Kennedy School of Government), Professor Barry Eichengreen (University of California at Berkeley) and Dr Jacob Frenkel (Chairman of JP Morgan Chase International). Professor Eichengreen presented the commissioned paper on “Financial Development in Asia: The Role of Policy and Institutions, with Special Reference to China”. The forum also included a panel discussion on the latest economic developments and policy issues confronting Asia, chaired by Mr Ravi Menon, MAS’ Managing Director.

20th Executives’ Meeting of East Asia-Pacific Central Banks Governors’ Meeting MAS hosted the 20th EMEAP Governors’ Meeting on 30 May 2015. Governors from the 11 EMEAP member central banks and monetary authorities exchanged views on the global economy, and growth prospects for the EMEAP region. They also discussed updates from the Monetary and Financial Stability Committee on its surveillance outcomes and research activities, and progress 20th EMEAP Governors’ Meeting and 4th made on EMEAP projects in banking supervision, Informal Meeting of EMEAP Governors and financial markets, payment and settlement Heads of Supervisory Authorities systems, and information technology. MAS prepared several research pieces for the Meeting, including a special paper on “Medium-Term Growth in EMEAP Economies and Some Implications for Monetary Policy” (MAS Staff Paper No. 53).

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ASEAN FINANCIAL REGULATORS’ EXECUTIVE PROGRAMME

BOX The inaugural ASEAN Financial Regulators’ Executive Programme was held from 24 to 27 9 January 2016.

Jointly organised by MAS and the Lee Kuan Yew School of Public Policy, with funding from the Temasek Foundation, the three-and-a-half-day executive programme brought together senior officials of the central banking and financial regulatory authorities from the ASEAN countries, to discuss and provide insights to governance and leadership challenges in financial regulation.

It was attended by 23 high level officials from 10 ASEAN countries, and featured a list of distinguished speakers including:

• Lord Adair Turner, former Chair of the UK Financial Services Authority; • Andrew Sheng, Distinguished Fellow at Asia Global Institute, University of Hong Kong and Chief Adviser to the China Banking Regulatory Commission; • Teo Swee Lian, former Deputy Managing Director of MAS; and • Anoop Singh, former director of the IMF’s Asia-Pacific Department.

The next run of the programme will take place in 2017.

Faculty and participants at the inaugural ASEAN Financial Regulators’ Executive Programme

66 Monetary Authority of Singapore VALUED PARTNER ON THE INTERNATIONAL FRONT

Faculty and participants at the inaugural ASEAN Financial Regulators’ Executive Programme

Annual Report 2015/16 67 ONE MAS: INTEGRATED AND COHESIVE

68 Monetary Authority of Singapore Annual Report 2015/16 69 ONE MAS: INTEGRATED AND COHESIVE

CELEBRATING 45 YEARS

MAS celebrated our 45th anniversary this year with the opening of the MAS Gallery in February 2016 (see Box 10). The Gallery is open to the public and showcases MAS’ role in maintaining price stability and developing a trusted, safe and progressive financial centre. The 45th anniversary theme will be featured in key MAS events such as our Annual Dinner and National Day celebrations. We also took the occasion to pay tribute to veteran MAS staff such as Zainal Abidin B Abni and Sapuan B Basari for their invaluable service over the years (see Box 11).

THE MAS GALLERY

BOX The MAS Gallery was officially launched by Mr Tharman Shanmugaratnam, Deputy Prime 10 Minister and Chairman of MAS on 16 February 2016. The opening of the Gallery this year takes on added significance as MAS celebrates its 45th anniversary. The 480-sqm Gallery was conceived to help visitors better understand MAS’ mission, values and functions. It comprises two sections – Insights@MAS and Reflections@MAS.

Insights@MAS offers visitors an overview of MAS’ functions. Through interactive games, videos, and stylised displays, visitors will learn how MAS conducts monetary policy to manage inflation, manages the official foreign reserves, issues currency notes and coins, regulates and supervises the financial sector, and promotes Singapore as a sound and progressive financial centre. Insights@MAS also highlights MAS’ efforts in raising financial literacy among Singaporeans, and offers a glimpse into how technology and innovation might transform future financial services and everyday life.

(L-R): Mr Lee Ek Tieng (past MD, November 1989 - December 1997), Mr Michael Wong Pakshong (past MD, December 1970 - February 1981), Mr Tharman Shanmugaratnam (Deputy Prime Minister and Chairman of MAS), Mr Goh Chok Tong (past Chairman, August 2004 - May 2011), Mr J.Y. Pillay (past MD, April 1985 - October 1989), Mr Ravi Menon (MD of MAS), at the MAS Gallery launch (continued on next page)

70 Monetary Authority of Singapore ONE MAS: INTEGRATED AND COHESIVE

THE MAS GALLERY continued

BOX Reflections@MAS highlights MAS’ mission and values, its leaders and people through a 10 compilation of videos and photographs.

Admission to the MAS Gallery is free and self-guided. The Gallery is open on weekdays from 9.30am to 5.30pm, and on Saturdays from 9.30am to 1.30pm (only for group visits). For more information on the MAS Gallery, please visit: www.mas.gov.sg/insights.

Tour of the MAS Gallery

Annual Report 2015/16 71 ONE MAS: INTEGRATED AND COHESIVE

45 YEARS IN MAS: AN INTERVIEW WITH SAPUAN AND ZAINAL

BOX 11

Zainal Abidin B Abni (left) and Sapuan B Basari (right)

At 16, he was looking for work to support his Finance. Both departments were located at parents, when his uncle informed him of a Fullerton Building then. job opening as a messenger at the soon-to- be-formed Monetary Authority of Singapore They rose through the ranks in MAS (MAS) and encouraged him to apply. Sapuan and have been tasked with increased B Basari did just that, as did Zainal Abidin B responsibilities over the years. Sapuan is now Abni, who was also 16 years old. an administrative officer with the Specialist Risk Department, while Zainal is a finance Little did they realise that they would embark executive with the Finance Department. on careers that would eventually span 45 years in MAS. In Sapuan’s current role, he takes charge of preparing and submitting his department’s After passing their interviews at the Board annual budget proposal, monitoring the usage of Commissioners of Currency Singapore of funds and processing the department’s Building at Empress Place, where MAS’ payments. He also manages the office administration office was originally located, operations and logistical requirements. Prior they immediately started work the next day to this appointment, he was a research officer as messengers, joining the first batch of in the then Supervisory Policy Department, staff to serve in MAS in 1971, when it was where he undertook research and daily first formed. Sapuan was posted to the monitoring of the developments in foreign Economic Intelligence Department, and Zainal jurisdictions. Beyond his official duties, to the Investment and Exchange Control Sapuan is also Chairperson of the MAS Staff Department (IEC), formerly the Department Branch – a union under the Amalgamated of Overseas Investments in the Ministry of Union of Public Employees. His committee (continued on next page)

72 Monetary Authority of Singapore ONE MAS: INTEGRATED AND COHESIVE

45 YEARS IN MAS: AN INTERVIEW WITH SAPUAN AND ZAINAL continued

BOX 11 of nine looks after the welfare of more abolished. It is now called the Finance than 200 members, and they hold regular Department. meetings to discuss plans on expanding its membership base and maintaining good “In those days, from ‘71 to the ‘80s, we were union-management rapport. As for Zainal, like a family. Because most of us who came he takes charge of accounts processing in in were really young, we clicked really well. his current role. He is also responsible for We were even invited to many birthday parties monitoring receipt of income and payment back then.” of expenses. Aside from his official duties, Zainal was also the Sports secretary of the Over the years, the two have also become MAS Recreation Club where he organised fun close friends; having lunch together or with sporting activities for MAS staff. friends from other departments before performing the afternoon prayers at a mosque The two men, who will turn 62 this year, near MAS. When asked about their happy recalled the days when they used to make memories in MAS, both men speak of the deliveries on foot to the various departments relationships with friends and colleagues that in MAS that were located in City Hall, Empress have kept them going. Place, OUE Building and Colombo Court. Sapuan said: “We were young and fit, so Sapuan said: “In those days, from ‘71 to the we could deliver letters from City Hall up to ‘80s, we were like a family. Because most of Shenton Way.” us who came in were really young, we clicked really well. We were even invited to many They also had to contend with travelling to birthday parties back then.” distant locations to deliver mail, added Zainal. He used to deliver the daily financial report and “There were no barriers and everyone was the Financial Times to the late Dr Goh Keng very easy-going with each other,” Zainal Swee, who was then stationed at the Ministry added with a smile. of Defence, near the Botanic Gardens. They still keep in touch with former colleagues, It was in 1972 that Sapuan saw an opening with whom they used to watch movies and for a clerk in another department and applied play soccer with after work. for the post. Meanwhile, Zainal followed suit in 1973 by applying for a clerical position in “It’s like another family, maybe even closer IEC, which later became the International than our own family,” said Sapuan with Department when exchange control was a laugh.

Annual Report 2015/16 73 ONE MAS: INTEGRATED AND COHESIVE

RISK MANAGEMENT AND (www.mas.gov.sg/Contact-Information.aspx), BUSINESS CONTINUITY and will treat any feedback provided with strict confidence. BUSINESS CONTINUITY, DISASTER RECOVERY AND MEPS+ RESILIENCY Key Principles of MAS’ Code of Conduct MAS conducts several exercises a year to ensure the operational readiness of staff and resiliency • Personal and professional behaviour: We of its infrastructure under its Business Continuity uphold the highest standards of conduct and and Disaster Recovery plans. In March 2015, behaviour in and outside MAS to safeguard an enterprise-wide mobilisation exercise to test MAS’ reputation and interests. In all our the organisation’s business continuity plan was dealings, we are guided by the principles of successfully conducted with MAS management fairness, integrity, and professionalism. and over 300 staff. MAS also conducts regular contingency exercises with the participants of • Duty of confidentiality: We safeguard, at all MAS Electronic Payment System (MEPS+), times, the confidentiality of documents and CLS Bank and Society for Worldwide Interbank information obtained during the course of our Financial Telecommunication (SWIFT) to ensure employment with MAS and even after we leave that the national payment system remains stable MAS. and resilient to minimise market disruption. MAS also reviewed its crisis management structure to • Conflicts of interest: We avoid situations that strengthen our analytical capabilities to support may give rise to actual, potential, or perceived crisis decision making and to facilitate a more conflicts of interest. We take appropriate steps seamless transition to crisis management. to mitigate potential conflicts of interest where such conflicts are unavoidable. INTERNATIONAL OPERATIONAL RISK WORKING GROUP • Use of MAS’ resources: We use all MAS’ resources, including financial, intellectual On the international front, MAS joined the and electronic assets, in a responsible and International Operational Risk Working Group appropriate manner. that discusses risk management approaches to address operational risks faced by central banks. MAS’ participation provided opportunities to benchmark its practices against our counterparts, CONTROLS AND OPERATIONS and to exchange good risk management practices. AUDIT ASSURANCE FINANCIAL INDUSTRY SECURITY PROGRAMME The Internal Audit Department (IAD) conducts an extensive programme of risk-focused audits At the industry level, MAS continued to work with to provide audit assurance and ascertain the the Singapore Police Force, and representatives efficacy of operational processes and controls. from the financial industry under the Financial During the year, IAD embarked on a review Industry Security Programme to enhance physical of our audit rating framework to give greater security (prevent crime and counter terrorism) and clarity to stakeholders on the state of control contingency preparedness within the industry. environment of the audited activity. Our internal quality assurance review concluded that our MAS’ WHISTLEBLOWING POLICY audit practices continue to be in line with established standards. We will continue to MAS has zero tolerance towards fraud. We step up efforts to seek technology solutions to encourage the public to report any fraud, unethical enhance audit processes and strengthen data behaviour or breaches in our Code of Conduct by analytics capabilities to attain a wider audit our staff. MAS will look into all feedback received coverage and more in-depth analysis.

74 Monetary Authority of Singapore ONE MAS: INTEGRATED AND COHESIVE

PROCUREMENT MANAGEMENT collaboration platform where staff can share and co-author documents, as well as initiate Ensuring a transparent, open and fair procurement document approval workflows from one process is of paramount importance. MAS has location. reviewed its procurement practices and put in place new controls to further enhance its • Personal Mobility and Protection Suite, procedures. comprising OneDrive, a collaboration and mobility tool that allows staff to share SECURITY AND FIRE SAFETY documents and collaborate with colleagues, or to work with documents offline, and be We have enhanced our security surveillance able to synchronise them to the corporate capability by doubling our CCTV coverage. We network when back in office; MyBackUp, a have also introduced video analytics to identify data protection tool with self-help recovery breaches more effectively. functions to protect staff from accidental data loss. BUILDING SERVICES AND INFRASTRUCTURE

MAS is in the process of compacting offices to optimise space usage and enhance work synergies between functional work units. The project is expected to be completed by Q3 2016.

As part of whole-of-government environmental sustainability efforts, other building infrastructures and services will be progressively DMS homepage upgraded by 2017 to meet new building requirements and energy standards. REINFORCEMENT OF MAS’ IT SECURITY INFRASTRUCTURE MAS was one of the top performing Government offices in the 2014 Building and Construction As part of MAS’ continuous efforts to Authority (BCA) Building Energy Benchmarking strengthen its cyber defences and protect exercise (notified in 2015). MAS also achieved valuable information assets, MAS’ IT security the BCA Green Mark Award (Platinum) in 2015. infrastructure was reinforced with capabilities to detect anomalies and improve resilience against advanced cyber attacks. These defences will be ENHANCING PRODUCTIVITY AND enhanced to safeguard MAS against emerging BUILDING CAPABILITIES cyber threats.

STAFF MOBILITY AND PRODUCTIVITY DATA GOVERNANCE AND ANALYTICS

Improving staff and organisational productivity Strengthening Data Governance Processes continues to be an important focus in MAS. MAS believes that a sound data governance To achieve this, we introduced the following framework provides the foundation for consistent, initiatives: reliable and useful data, and expands the potential for analytics within and beyond MAS. • The Document Management Solution (DMS), With the setting up of the Data Governance which allows staff to create, manage, find and Analytics Unit in April 2015, we have been and share information easily. The DMS brings focused on strengthening our internal data together corporate documents previously governance processes. We are fine-tuning our stored in various locations into a central data management policies, which will lay out repository, enhancing knowledge sharing clear processes to aid the access, collection and capabilities in MAS. It is also an integrated quality of data.

Annual Report 2015/16 75 ONE MAS: INTEGRATED AND COHESIVE

Growing Analytics Capabilities steps to address key issues arising from the EES, MAS’ roles as an economic policy maker, integrated such as improving productivity and streamlining supervisor overseeing financial institutions and work processes, in our continuing efforts to make operator of Singapore’s national payment system MAS a better workplace for all staff. require it to collect, store and analyse massive and varied data from many different sources. With an increasing demand to derive quicker and deeper insights from this wealth of data, we have embarked on several analytics-related projects to facilitate cross-functional analysis of data, enable new insights and enhance surveillance through better data visualisation and discovery tools.

MAS is also continuously growing our data analytics capabilities. We started a sponsorship programme for Massive Open Online Courses in data science to give staff good grounding in data science concepts and tools for their daily work.

Engaging Public Agencies MAS collaborates actively with other public agencies on various whole-of-government initiatives. We are working with the Infocomm Development Authority (IDA) on the provision of MAS’ datasets on the revamped data.gov.sg, with the aim of making our data more relevant and accessible to both the industry and general public. We have also collaborated with IDA on the Personal Data Protection Challenge, where a total of 13 teams submitted their solutions to Staff at the EES Town Hall sessions MAS’ challenge statement. BRINGING OUR PEOPLE CLOSER, CELEBRATING SG50 BUILDING A STRONG MAS FAMILY The 43rd and 44th MAS Recreation Club EMPLOYEE ENGAGEMENT SURVEY Committees continued to create opportunities for staff to come together and bond meaningfully. MAS conducted an Employee Engagement Survey These included special events organised in (EES) in October 2015, to gauge the level of staff 2015 as part of Singapore’s Golden Jubilee engagement and identify areas for improvement celebrations. We saw greater staff participation in within the organisation. The survey, the fourth performances, sports events and support for our since 2008, drew a strong participation rate of adopted beneficiaries. This allowed staff to build 95%. The EES was followed by a series of town connections outside of the office while celebrating halls, with discussions involving all MAS staff and Singapore’s 50th year of independence. management. MAS Carnival & Community Service Day 2015 The EES process highlighted several areas of The inaugural MAS Carnival was held on 9 June strengths in the organisation, in particular staff’s 2015 at Toa Payoh Stadium and Sports Hall. About strong connection to the values of MAS and a spirit 900 staff attended the Carnival to cheer on over of collaboration across departments. MAS is taking 250 colleagues competing against each other

76 Monetary Authority of Singapore ONE MAS: INTEGRATED AND COHESIVE in multiple sporting activities and tele-matches. Annual Dinner 2015 These included track and field, tug-of-war, netball, On 24 July 2015, MAS staff gathered at the Raffles dodgeball and flag football. Community Service City Convention Centre for an unforgettable Day 2015 was also held in conjunction with the evening, reminiscing local television classics and Carnival, with participating departments organising celebrating Singaporean icons through the years. innovative activities (e.g. a Cold Splash challenge) Themed “Spectacular, Spectacular!”, the event alongside sales of delicious food and beverages to involved everyone through costume competitions, raise funds for MAS’ adopted beneficiaries. staff emcees and performances, and even a surprise management performance.

Community Service MAS continued to organise activities in support SG50 National Day Celebrations of our adopted beneficiaries – Lions Befrienders, MAS staff were treated to a special National Day Grace Orchard School and the New Horizon Celebration on 6 August 2015. The Golden Jubilee Centre. Our volunteers held block parties and commemoration event was themed “It All Started excursion trips for elderly folks to events such With A Dream”, to celebrate how far we have as the ASEAN Para Games, and helped spring come as a nation in the last 50 years. Staff were clean their homes over Chinese New Year. We moved by the “Resilience” video which reviewed also conducted mock interviews for special needs some of the key events of the organisation through children, as well as organised a special outing to staff interviews. They also enjoyed the games and Jurong Bird Park for them and their families which performances by the newest officers, and a buffet incorporated staff-run games stations. lunch. The contributions of long-serving colleagues were also recognised and celebrated in an awards Our thanks go out to all staff who participated ceremony. in MAS fundraising events. Through Community Service Day, Heartstrings Walk and the Care & Share pledge cards, staff contributed more than $30,000 to ComChest in 2014. In recognition of the funds raised, MAS was awarded the Corporate Bronze Award by ComChest in 2015, one of two government agencies to receive the award since its inception in 2011. MAS also continued to support other initiatives such as the annual Share-A-Gift initiative by Boys’ Brigade, and Red Cross disaster relief for the victims of the 2015 Nepal earthquake. Inter-Central Bank Games 2015 The 39th Inter-Central Bank Games (ICBG) took place from 18 to 21 September 2015 in Kota Kinabalu, Malaysia. MAS’ representatives competed with our regional counterparts in Vertical Run, Basketball, Flag Football, Darts, Virtual Games and the ICBG-Got-Talent competition. MAS finished in 4th place overall.

Annual Report 2015/16 77 ONE MAS: INTEGRATED AND COHESIVE

PEOPLE DEVELOPMENT

Building Technical Competencies To keep up with growing complexities of the industry, improve productivity, and maximise our potential, MAS encourages staff to continually develop and deepen their skills. Development opportunities include on-the-job and classroom training, scholarships for post-graduate Kidz@Work 2015 studies, educational sponsorships, postings On 24 December 2015, over 100 children of to complementary functions within MAS, and MAS staff enjoyed themselves at the annual MAS external secondments and attachments. The Kidz@Work event. The party kicked off with a external secondments and attachments to magic show and a staff-choreographed musical supranational organisations, foreign central performance. The children were then treated to a banks and supervisory authorities, as well carnival with free-flow popcorn and candy floss, a as leading financial institutions provide our photo booth, balloon sculpting, and a wide range officers with valuable opportunities to acquire of games stations. technical expertise, industry knowledge and best practices.

General Development Training A broad suite of general development training programmes based on the Capacity, Leadership, Interpersonal skills, and Personal attributes (CLIP) framework are also offered to staff. These include a good range of courses that equip staff with written and verbal communication skills, personal effectiveness, and tools for effective engagement and leadership. Family Day 2016 MAS’ annual Family Day took place at the Jurong Functional Training Bird Park on 12 March 2016. Themed “It’s gonna The MAS Academy offers technical programmes be Birdy Good!”, the event attracted over 500 staff to build and strengthen functional competencies and their families for a morning of fun and bonding required across the organisation, as guided by amid our feathered friends. The entertainment MAS’ Professional Requisites and Outcomes included an interactive bird show, snack stalls, Framework (PROF). The types of training include variety games, a magic show and a lucky draw. classroom programmes, as well as talks by experienced professionals, industry experts and academics on emerging trends and areas of specialisation relevant to MAS.

MAS Diploma The MAS Academy offers the MAS Diploma – a three-year flagship programme, which gives a broad-based education on MAS’ key functions. The compulsory modules cover the foundations

78 Monetary Authority of Singapore ONE MAS: INTEGRATED AND COHESIVE of central banking, financial regulation, supervision PARTNERSHIP WITH UNION and development. Participants also choose elective modules covering a wide range of MAS was conferred the Plaque of Commendation specialised topics depending on their interests. Award at the NTUC May Day Awards 2015, under To attain the Diploma, they are also required to the nomination of our union, the Amalgamated complete a final year project to contribute to the Union of Public Employees. The honour is given to knowledge building and sharing culture within companies that have made significant contributions MAS. In FY 2015/16, there were 39 graduates from to the Labour Movement and signifies our strong the programme. partnership with the union developed over the years through mutual trust and respect. LEADERSHIP DEVELOPMENT

MAS Leadership Programmes The MAS Leader Development Programme is designed for Division Heads and Specialist Leaders, and focuses on areas such as leadership development, policy formulation and stakeholder engagement. The MAS Manager Development Programme comprises programmes that are targeted at staff who are newly appointed into a managerial role, and those who are experienced managers respectively. Guest of Honour, Mr Tharman Shanmugaratnam, Deputy RECOGNITION OF STAFF Prime Minister and Chairman of MAS at the NTUC May Day Dinner 2015 and representatives from MAS at the NTUC May Service Appreciation Awards Day Awards 2015, with MAS’ Plaque of Commendation Award The Service Appreciation Award (SAA) recognises and celebrates the loyalty and contributions of our dedicated staff. The awards ceremony was held on 6 August 2015. In all, 189 staff received the SAA for service in MAS ranging from five years to 40 years. Thirteen staff received the 40-year award.

National Day Awards In 2015, 15 MAS staff were honoured for their contributions and service to the nation. Among the recipients were Assistant Managing Director Chia Der Jiun and Assistant Managing Director Wong Nai Seng who were conferred the Public Administration (Silver) Medal. We extend our heartiest congratulations to all our National Day Award recipients.

Annual Report 2015/16 79 80 Monetary Authority of Singapore FINANCIAL STATEMENTS

82 Financial Statement Highlights

83 Statement by Directors

84 Auditor’s Report

86 Consolidated Statement of Comprehensive Income

87 Consolidated Balance Sheet

88 Consolidated Statement of Changes in Equity

89 Consolidated Cash Flow Statement

90 Statement of Backing of Currency in Circulation

91 Notes to the Consolidated Financial Statements

Annual Report 2015/16 81 MAS FY2015/2016 FINANCIAL STATEMENT HIGHLIGHTS

The Authority’s total assets, including the Currency Fund’s assets, decreased by 0.6% over the financial year ended March 2016, to $385.1 billion, as foreign financial assets translated to stronger Singapore dollar terms, contracted. Total liabilities also declined, by 0.7% to $344.3 billion, mainly due to the $19.3 billion reduction in outstanding MAS bills issued, offset partially by the $9.2 billion increase in the Singapore Government’s balances with the Authority and other smaller increases in liabilities. The currency-in-circulation grew by 6.4%.

The Currency Fund’s net external assets grew by 5.6% to $48.8 billion, backing the higher currency- in-circulation by 124%, compared to 125% a year ago.

The Authority recorded a net profit of $0.2 billion in the financial year ended March 2016 (FY15), as total income increased by 27.6% to $1.9 billion whilst total expenditure rose by 44.4% to $1.7 billion. The SGD translation effect was negative due mainly to the strengthening of the SGD against the USD and GBP by 1.9% and 5.2% respectively which was offset partly by the weakening of the SGD against the Euro and Yen by 4.0% and 4.5% respectively.

The Authority’s total expenditure increase was attributable to higher investment and interest expenditure. Whilst the Authority’s borrowings were reduced significantly during the year, Singapore dollar interest rates averaged higher, compared to the previous year. General and administrative expenditure was higher, arising mainly from costs related to the SG50 commemorative note issuance.

Based on the framework for Contributions to Consolidated Fund, no contribution to the Consolidated Fund is required for this financial year as the net profit for the year was offset by carried forward losses from previous financial years. The net profit for the year will be added to the Authority’s reserves, in accordance with the Monetary Authority of Singapore Act.

82 Monetary Authority of Singapore STATEMENT BY DIRECTORS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

In the opinion of the directors,

(a) the consolidated financial statements of the Authority and its wholly-owned subsidiary, Singapore Sukuk Pte Ltd, as set out on pages 86 to 110 are drawn up so as to present fairly the state of affairs of the Authority as at 31 March 2016, the results and changes in equity of the Authority for the financial year ended on that date, and of the cash flows of the Authority for the financial year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the Authority will be able to pay its debts as and when they fall due.

On behalf of the Board of Directors,

THARMAN SHANMUGARATNAM Chairman

RAVI MENON Managing Director

24 June 2016

Annual Report 2015/16 83 INDEPENDENT AUDITOR’S REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OF THE MONETARY AUTHORITY OF SINGAPORE FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

The accompanying financial statements of the Monetary Authority of Singapore (the “Authority”), its subsidiary and Currency Fund, set out on pages 86 to 110, have been audited under my direction. These financial statements comprise the consolidated balance sheet as at 31 March 2016, the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated cash flow statement and statement of backing of currency in circulation for the financial year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition) and Currency Act (Cap. 69, 2002 Revised Edition) and applicable Singapore Financial Reporting Standards as explained in Note 3.1(a) to the consolidated financial statements, and for such internal controls as management determines are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

My responsibility is to express an opinion on these financial statements based on the audit. The audit was conducted in accordance with the provisions of the Monetary Authority of Singapore Act and Currency Act and having regard to Singapore Standards on Auditing. Those standards require that ethical requirements be complied with, and that the audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating, within the context of applicable laws, the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion.

84 Monetary Authority of Singapore OPINION

As disclosed in Note 3.1(a) to the consolidated financial statements, the Authority, in preparing these financial statements, is allowed under section 34(3) of the Monetary Authority of Singapore Act and section 21(10) of the Currency Act to comply with accounting standards to the extent that it is, in the opinion of the Authority, appropriate to do so, having regard to its objects and functions. As also disclosed in Note 3.1(a), the Authority has considered its responsibilities for managing the Singapore dollar exchange rate and the Official Foreign Reserves and is of the view that, for effective management of Singapore’s monetary policy, it would be appropriate not to meet, in some respects, the Singapore Financial Reporting Standards. The financial statements accordingly disclose less information than would be required under those Standards.

Having regard to the power given to the Authority under section 34(3) of the Monetary Authority of Singapore Act and section 21(10) of the Currency Act, in my opinion, the consolidated financial statements present fairly, based on the framework of accounting standards adopted by the Authority, the state of affairs of the Authority and its subsidiary as at 31 March 2016 and the financial transactions of the Authority and its subsidiary for the financial year ended on that date.

TAN YOKE MENG WILLIE AUDITOR-GENERAL SINGAPORE

24 June 2016

Annual Report 2015/16 85 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

General Currency Note Reserve Fund Fund Total For the year ended 31 March 2016 2015 2016 2015 2016 2015 in $ millions

Income/(Loss) from Foreign Operations [after transfers to/from provisions] 4 433 (1,877) 1,451 3,072 1,884 1,195

Income/(Loss) from Domestic and Other Operations 5 (5) 266 3 11 (2) 277

Non-operating Income 6 10 11 1 – 11 11

Total Income/(Loss) [after transfers to/from provisions] 438 (1,600) 1,455 3,083 1,893 1,483

Less:

Investment, Interest and Other Expenses 7 1,302 798 106 102 1,408 900

Personnel Expenditure 8 224 220 – – 224 220

General and Administrative Expenditure 9 81 60 – – 81 60

Depreciation/Amortisation 16 23 22 – – 23 22

Total Expenditure 1,630 1,100 106 102 1,736 1,202

Profit/(Loss) for the Year [after transfers to/from provisions] (1,192) (2,700) 1,349 2,981 157 281

Less:

Contribution to Consolidated Fund 19.2 – – – – – –

Net Profit/(Loss) and Total Comprehensive Income/ (Loss) for the Year [after transfers to/from provisions] (1,192) (2,700) 1,349 2,981 157 281

The accompanying notes form an integral part of these financial statements.

86 Monetary Authority of Singapore CONSOLIDATED BALANCE SHEET

As at 31 March Note 2016 2015 in $ millions

CAPITAL AND RESERVES Issued and Paid-up Capital 10 25,000 25,000 General Reserve Fund 11 6,396 6,455 Currency Fund Reserves 12 9,418 9,202 40,814 40,657

Represented by:

ASSETS Cash and Bank Balances 861 876 Singapore Dollar Securities 13 8,661 7,723 Foreign Financial Assets 14 361,150 363,644 Gold 285 290 Other Assets 15 13,974 14,668 Property and Other Fixed Assets 16 190 184 385,121 387,385 Less:

LIABILITIES Currency in Circulation 39,339 36,979 Deposits of Financial Institutions 17 26,823 25,783 MAS Bills 18 77,982 97,281 Foreign Financial Liabilities 14 19,972 17,841 Provisions and Other Liabilities 18 54,892 52,729 Amounts Due to Singapore Government 19 125,299 116,115 344,307 346,728

NET ASSETS OF THE AUTHORITY 40,814 40,657

The accompanying notes form an integral part of these financial statements.

Annual Report 2015/16 87 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Issued and General Currency Paid-up Reserve Fund in $ millions Capital Fund Reserves Total

Balance as at 1 April 2014 25,000 6,115 9,261 40,376

Total Comprehensive Income/(Loss) for the Year (after transfers to/from provisions) – (2,700) 2,981 281

Transfer of Reserves from Currency Fund – 3,040 (3,040) –

Balance as at 31 March 2015 25,000 6,455 9,202 40,657

Total Comprehensive Income/(Loss) for the Year (after transfers to/from provisions) – (1,192) 1,349 157

Transfer of Reserves from Currency Fund – 1,133 (1,133) –

Balance as at 31 March 2016 25,000 6,396 9,418 40,814

The accompanying notes form an integral part of these financial statements.

88 Monetary Authority of Singapore CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 March 2016 2015 in $ millions

Cash Flows from Operating Activities

Profit for the Year (after transfers to/from provisions) 157 281

Adjustments for: Depreciation/Amortisation of Fixed Assets and Other Assets 23 22

Profit before Working Capital Changes 180 303

(Increase)/Decrease in Singapore Dollar Securities (938) (716) Foreign Financial Assets 2,494 (3,618) Gold 5 (24) Other Assets 694 (2,575)

Increase/(Decrease) in Deposits of Financial Institutions 1,040 (8,574) MAS Bills (19,299) 20,944 Foreign Financial Liabilities 2,131 908 Provisions and Other Liabilities 2,169 (10,131) Amounts due to Singapore Government (excluding Contribution to Consolidated Fund and Return of Profit to Singapore Government) 9,184 384

Net Cash used in Operating Activities (2,340) (3,099)

Cash Flows from Investing Activities Purchase of Fixed Assets (35) (27)

Net Cash used in Investing Activities (35) (27)

Cash Flows from Financing Activities Increase in Currency in Circulation 2,360 3,120

Net Cash from Financing Activities 2,360 3,120

Net Decrease in Cash and Bank Balances (15) (6)

Cash and Bank Balances as at beginning of the year 876 882

Cash and Bank Balances as at end of the year 861 876

The accompanying notes form an integral part of these financial statements.

Annual Report 2015/16 89 STATEMENT OF BACKING OF CURRENCY IN CIRCULATION

The Currency Fund is established under Section 21 of the Currency Act (Cap. 69, 2002 Revised Edition). Section 22 of the Act states that the external assets of the Currency Fund shall not be less than 100% of the face value of the Currency in Circulation.

As at 31 March Note 2016 2015 in $ millions

The value of External Assets and the Currency in Circulation are:

Currency in Circulation 12.2 39,339 36,979

External Assets 12.2 52,153 48,039

Less:

Foreign Financial Liabilities 12.2 2,925 1,668 Provisions and Other Liabilities 12.2 471 190 3,396 1,858

Net External Assets 48,757 46,181

The accompanying notes form an integral part of these financial statements.

90 Monetary Authority of Singapore NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

These notes form an integral part of and should be read in conjunction with the accompanying consolidated financial statements.

1 GENERAL

1.1 The Monetary Authority of Singapore (the “Authority”) is a statutory board established in Singapore under the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition) on 1 January 1971 and is located at 10 Shenton Way, MAS Building, Singapore 079117.

1.2 The consolidated financial statements presented relate to those of the Authority and its wholly-owned subsidiary, Singapore Sukuk Pte Ltd (SSPL). The financial statements of the Authority are not materially different from the consolidated financial statements and have not been presented separately.

1.3 The Authority, subject to the directions of the Minister, controls and administers the Financial Sector Development Fund (the “Fund”), a fund established under Section 30A of the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition) for the objects and purposes set out in Section 30B of the Monetary Authority of Singapore Act. The audited financial statements of the Fund, prepared in accordance with the provisions of the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition) and the Singapore Financial Reporting Standards, are available on the Authority’s website at http://www.mas.gov.sg.

2 PRINCIPAL ACTIVITIES

2.1 The principal activities of the Authority are:

a) the conduct of monetary policy, issuance of currency, management of the official foreign reserves and acting as the banker to and financial agent of the Government; and

b) the supervision of the banking, insurance, securities and futures industries, and development of strategies in partnership with the private sector to promote Singapore as an international financial centre.

2.2 The Authority’s subsidiary, SSPL, is a special purpose entity incorporated in Singapore, to issue Sukuk certificates as Shariah-compliant assets to Islamic financial institutions to meet regulatory requirements.

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3 SIGNIFICANT ACCOUNTING POLICIES

3.1 Compliance with the Monetary Authority of Singapore Act, Currency Act and Singapore Financial Reporting Standards

a) The consolidated financial statements of the Authority, are prepared in accordance with the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition), Currency Act (Cap. 69, 2002 Revised Edition) and applicable Singapore Financial Reporting Standards (FRS). Section 34(3) of the Monetary Authority of Singapore Act and Section 21(10) of the Currency Act provide that the Authority, in preparing its consolidated financial statements, may comply with accounting standards to the extent that it is, in the opinion of the Authority, appropriate to do so, having regard to the objects and functions of the Authority. The Authority, having considered its responsibilities for managing the Singapore dollar exchange rate and the official foreign reserves, is of the opinion that, for effective management of Singapore’s monetary policy, it is appropriate not to meet, in some respects, the Singapore Financial Reporting Standards. The consolidated financial statements accordingly disclose less information than would be required under those Standards.

b) The new or revised FRSs applicable in the current financial year do not have a significant impact on the Authority’s consolidated financial statements.

c) The preparation of consolidated financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Authority’s accounting policies, having regard to the objects and functions of the Authority. It also requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income and expenditure during the financial year. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from these estimates.

3.2 Basis of Accounting

The consolidated financial statements have been prepared under the historical cost convention and on an accrual basis, except as otherwise disclosed.

3.3 Basis of Consolidation

a) Subsidiaries are entities (including structured entities) over which the Authority has control. The Authority controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

92 Monetary Authority of Singapore NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

b) A subsidiary is consolidated from the date control is established, acquired or transferred to the Authority to the date control ceases. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange.

c) Balances and transactions between the Authority and its subsidiary, together with any unrealised profits and losses arising from these transactions are eliminated, in preparing the consolidated financial statements.

3.4 Foreign Currency Translation

a) The consolidated financial statements are presented in Singapore dollars, the Authority’s functional currency, and rounded to the nearest million, unless otherwise stated.

b) Transactions in foreign currency are measured at the exchange rate prevailing at the date of transaction. Foreign currency gains or losses resulting from the settlement of such transactions are recognised in the consolidated statement of comprehensive income.

c) Assets and liabilities denominated in foreign currencies are translated into Singapore dollars, at the exchange rate prevailing on the balance sheet date, except for shareholdings in Bank for International Settlements (BIS) and Society for Worldwide Interbank Financial Telecommunication (SWIFT) which are converted at the rates of exchange prevailing on the acquisition dates. Exchange differences arising from the translation are recognised in the consolidated statement of comprehensive income.

3.5 Recognition and Derecognition

Purchases and sales of investments are recognised on the trade date when the Authority commits to purchase or sell the asset. Investments are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Authority has transferred substantially all risks and rewards of ownership.

3.6 Income Recognition

a) Dividend income is recognised when the right to receive payment is established.

b) Interest income is recognised on a time-proportionate basis using the effective interest method. The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instrument or, where appropriate, a shorter period to the net carrying amount.

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c) Profits/losses on disposal of investments are taken to the consolidated statement of comprehensive income.

d) Licence fee income is recognised on a straight-line basis over the period of the licence.

3.7 Singapore Dollar Securities

Singapore Government Treasury bills and bonds and corporate bonds held are stated at cost. Provision has been made for diminution in value, if any, based on the lower of cost and market value on an individual investment basis.

3.8 Gold

Gold is a long-term investment stated at cost. Provision for diminution in value would be made in the event of a decline other than temporary in its value.

3.9 Foreign Financial Assets and Liabilities

Foreign financial assets and liabilities represent the Authority’s investments in a global diversified portfolio and are stated at cost. Provision has been made for diminution in value, if any, based on the lower of cost and market value on an individual investment basis.

3.10 Financial Derivatives

Financial derivatives include forwards, swaps, futures and options and are included in foreign financial assets and foreign financial liabilities. Other than financial instruments that are subject to margin requirements or central clearing which are fair valued, provision has been made for diminution in value, if any, of other financial derivatives based on the lower of cost and market value on an individual investment basis.

3.11 Repurchase and Reverse Repurchase Agreements (“Repos” and “Reverse Repos”)

Reverse repos are treated as collateralised borrowings and the amounts borrowed are included in “Provisions and Other Liabilities”. The securities sold under reverse repos are treated as pledged assets and remain on the consolidated balance sheet. Repos are treated as collateralised lending and the amounts lent are included in “Other Assets”. The difference between the amount received and the amount paid under repos and reverse repos is recognised as interest income and interest expense respectively.

3.12 Property, Other Fixed Assets and Depreciation

a) Property and other fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. The cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the cost less residual value of the fixed assets over their estimated useful lives as follows:

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Useful lives Leasehold Land Period of lease Buildings 50 years or period of lease whichever is lower Building Improvements 10 years Computer Hardware and Software 3 to 5 years Furniture, Fixtures, Motor Vehicles and 3 to 5 years Other Equipment

The residual values and useful lives are reviewed and adjusted as appropriate, at each balance sheet date.

b) Computer software costs of less than $100,000 and other assets costing $1,000 and below are expensed off in the year of purchase. Any computer software costs not written off, are included in fixed assets.

c) Property and other fixed assets are reviewed for impairment whenever there is any indication that these assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated to determine the amount of impairment loss. The impairment loss is recognised in the consolidated statement of comprehensive income for the period.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal, if any, is recognised in the consolidated statement of comprehensive income. However, the increased carrying amount of an asset due to a reversal of an impairment is recognised to the extent that it does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment losses been recognised for the asset in prior years.

d) On disposal of fixed assets, the difference between the net disposal proceeds and its carrying amount is taken to the consolidated statement of comprehensive income.

3.13 Operating Leases

a) Leases where substantially all the rewards and risks of ownership remain with the lessors are accounted for as operating leases. Rental receipts or payments under operating leases are accounted for in the consolidated statement of comprehensive income on an accrual basis according to the terms of the agreements.

b) When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an income or expense in the period in which termination takes place.

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3.14 Employee Benefits

a) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Authority pays fixed contributions into entities such as the Central Provident Fund, and will have no legal or constructive obligation to pay further contributions. The Authority’s contributions to defined contribution plans are recognised in the financial year to which they relate.

b) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for annual leave as a result of services rendered by employees up to the balance sheet date.

4 INCOME/(LOSS) FROM FOREIGN OPERATIONS

Income/(Loss) from foreign operations includes interest, dividends, profit/loss on disposal of investments, foreign exchange gain/loss and write-back of/additional provision for diminution in value of investments.

5 INCOME/(LOSS) FROM DOMESTIC AND OTHER OPERATIONS

Income/(loss) from domestic and other operations includes mainly interest, write-back of/ additional provision for diminution in value of Singapore Dollar Securities and other income/(loss) from Singapore dollar money market transactions, licence and inspection fees, revenue from currency-related operations, custody fee and revenue from services rendered to banks and financial institutions on MAS Network and MAS Electronic Payment System which provides real-time gross settlement of payments.

Income/(loss) from Singapore dollar currency swaps has been reclassified from “Income/(Loss) from Foreign Operations” to “Income/(Loss) from Domestic and Other Operations” in the financial year ended 31 March 2016 to better reflect its function. The comparative amount in the preceding year has also been reclassified to be consistent with the presentation in the current financial year.

6 NON-OPERATING INCOME

Non-operating income includes rental and carpark income, liquidated damages and management service fees.

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7 INVESTMENT, INTEREST AND OTHER EXPENSES

Investment and interest expenses include management fees, futures/options commissions, bank, custody and other charges arising from foreign operations, and interest paid on borrowings and reverse repurchase agreements arising from domestic and other operations. Other expenses include costs of printing of currency notes and coin operations.

8 PERSONNEL EXPENDITURE

8.1 This includes the following:

in $ millions 2016 2015

Salaries 190 187 Employer’s Contribution to the Central Provident Fund 20 18 Staff Benefits and Training 10 10

The Minister-in-charge of the Authority is not paid a salary by the Authority. Directors’ fees for the year totalled $0.14 million (2015: $0.12 million). All Ministers serving on the Authority’s Board of Directors do not receive directors’ fees.

8.2 The key management personnel compensation is as follows:

in $ millions 2016 2015

Salaries and Other Short-term Employee Benefits 21 20 Other Long-term Employee Benefits 4 4

Post-employment benefits of $0.7 million (2015: $0.6 million) were also provided to key management personnel.

Executive Directors, Department Heads and above, are considered as key management personnel for this purpose.

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9 GENERAL AND ADMINISTRATIVE EXPENDITURE

This includes the following:

in $ millions 2016 2015

Information Technology 15 12 Publishing and Printing 13 – Consultancy, Legal and Other Fees 8 4 Information Resources 6 6 Rental and Maintenance 6 5 Subscription to Organisations 5 4 Travel and Accommodation 5 5 IT Operating Lease 2 5 Audit Fee 1 1

10 CAPITAL AND RESERVES

10.1 The issued and paid-up capital is wholly-owned by the Government of the Republic of Singapore.

10.2 The Authority manages its capital and reserves at an appropriate and adequate level, in pursuit of the Authority’s principal objects, as set out in Section 4 of the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition) that is, to maintain price stability conducive to sustainable economic growth, foster a sound and reputable financial centre, grow Singapore as an internationally competitive financial centre and ensure prudent and effective management of the official foreign reserves of Singapore. As required by the Constitution of the Republic of Singapore, the Authority has to determine and safeguard the past reserves of the Authority which were not accumulated during the current term of office of the Government.

10.3 Taking into consideration the Authority’s capital and reserves needs for its principal objects, the Authority conducts capital and reserves adequacy assessment regularly. It includes a comprehensive assessment of risks that the Authority is exposed to, the measurement, monitoring and stress testing of these risks and an evaluation of the adequacy of the Authority’s capital and reserves in relation to these risks.

10.4 The return of profit to the Singapore Government, from the General Reserve Fund and/or from the net profit for each financial year, is determined by the Authority and the remainder of the net profit, if any, is credited to the General Reserve Fund, in accordance with Section 6 of the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition).

98 Monetary Authority of Singapore NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

11 GENERAL RESERVE FUND

The General Reserve Fund is established under Section 6(1) of the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition).

12 CURRENCY FUND RESERVES

12.1 The Currency Fund, established under Section 21 of the Currency Act (Cap. 69, 2002 Revised Edition), is maintained and managed by the Authority in the manner prescribed by the Act.

12.2 The assets and liabilities of the Currency Fund as at 31 March are as follows:

in $ millions Note 2016 2015

External Assets Gold 223 227 Foreign Investments 14.1(a) 51,930 47,812 52,153 48,039

Less:

Liabilities Active Currency in Circulation 38,506 36,130 Currency Held by the Authority 833 849 Currency in Circulation 39,339 36,979

Foreign Financial Liabilities 14.1(a) 2,925 1,668 Provisions and Other Liabilities 471 190 3,396 1,858 42,735 38,837 Currency Fund Reserves 9,418 9,202

13 SINGAPORE DOLLAR SECURITIES

Singapore Dollar Securities comprise:

in $ millions 2016 2015

Singapore Government Bonds 8,609 7,713 Singapore Dollar Corporate Bonds 52 10 8,661 7,723

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14 FOREIGN FINANCIAL ASSETS AND LIABILITIES

14.1(a) These comprise the following:

General Reserve Fund Currency Fund Total in $ millions Note 2016 2015 2016 2015 2016 2015

Foreign Investments Bank Balances and Deposits 47,311 48,305 5,864 5,079 53,175 53,384 Securities (including Treasury Bills, Bonds and Equities) 251,221 257,089 44,390 40,981 295,611 298,070 Other Foreign Investments 6,773 7,375 1,676 1,752 8,449 9,127

International Monetary Fund (IMF) Assets 14.2 Reserve Tranche 2,175 1,058 – – 2,175 1,058 Special Drawing Rights (SDRs) 1,412 1,654 – – 1,412 1,654 Loans under New Arrangements to Borrow 21.1(c) 224 247 – – 224 247 Poverty Reduction and Growth Facility – Heavily Indebted Poor Countries 8 8 – – 8 8

Shareholding in Bank for International Settlements (BIS) 14.3 96 96 – – 96 96

Foreign Financial Assets 309,220 315,832 51,930 47,812 361,150 363,644

Foreign Borrowings and Other Liabilities 15,635 14,765 2,925 1,668 18,560 16,433

IMF SDR Allocations 14.1(b) 1,412 1,408 – – 1,412 1,408

Foreign Financial Liabilities 17,047 16,173 2,925 1,668 19,972 17,841

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14.1(b) The Authority’s allocations of Special Drawings Rights in IMF has been reclassified more appropriately from “Provision and Other Liabilities” to “Foreign Financial Liabilities” in the financial year ended 31 March 2016 and its comparative has also been reclassified accordingly to be consistent with the presentation in the current financial year.

14.2 International Monetary Fund (IMF) Assets

The Reserve Tranche represents the amount of the paid-up portion of the Singapore quota. Special Drawing Rights (SDRs) are interest-yielding balances with IMF that can be exchanged for convertible currencies. Singapore participates in the Poverty Reduction and Growth Facility-Heavily Indebted Poor Countries (PRGF-HIPC). The PRGF-HIPC outstanding balance as at 31 March 2016 is SDR4.0 million [$7.7 million] (31 March 2015: SDR4.0 million [$7.7 million]), being the balance in Post-Special Contingent Account-2 with IMF which was transferred to the PRGF-HIPC on 24 April 2001 as an interest-free deposit maturing at the end of 2018.

14.3 Bank for International Settlements (BIS)

The Authority’s shareholding in the BIS comprises the 25% paid-up value of 4,285 (31 March 2015: 4,285) shares with a nominal value of SDR5,000 ($9,488) (31 March 2015: SDR5,000 [$9,462]) each.

15 OTHER ASSETS

These comprise the following:

in $ millions 2016 2015

Loans, Deposits and Other Receivables 6,630 6,484 Receivable from MAS Bills Issued 4,293 5,387 Repurchase Agreements with Singapore Government 3,051 2,797 13,974 14,668

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16 PROPERTY AND OTHER FIXED ASSETS

Furniture, Fixtures, Computer Motor Building Hardware Vehicles Leasehold Improve- and and Other Work-in- in $ millions Land Buildings ments Software Equipment Progress Total

COST As at 1.4.2014 48 171 94 117 29 24 483 Additions – – – 4 1 26 31 Disposals – – – (6) (2) – (8) Transfers – – 13 13 – (26) – As at 31.3.2015 48 171 107 128 28 24 506

ACCUMULATED DEPRECIATION As at 1.4.2014 17 88 91 85 26 – 307 Disposals – – – (6) (1) – (7) Depreciation Charge 1 4 3 12 2 – 22 As at 31.3.2015 18 92 94 91 27 – 322 NET BOOK VALUE AS AT 31.3.2015 30 79 13 37 1 24 184

COST As at 1.4.2015 48 171 107 128 28 24 506 Additions – – – 1 – 28 29 Disposals – – (1) (2) (4) – (7) Transfers – – 14 11 4 (29) – As at 31.3.2016 48 171 120 138 28 23 528

ACCUMULATED DEPRECIATION As at 1.4.2015 18 92 94 91 27 – 322 Disposals – – (1) (2) (4) – (7) Depreciation Charge 1 4 2 14 2 – 23 As at 31.3.2016 19 96 95 103 25 – 338 NET BOOK VALUE AS AT 31.3.2016 29 75 25 35 3 23 190

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17 DEPOSITS OF FINANCIAL INSTITUTIONS

in $ millions 2016 2015

Banks 23,303 22,635 Finance Companies 381 359 Securities Companies 10 9 23,694 23,003 International Financial Institutions 960 459 Foreign Central Banks and Others 2,169 2,321 26,823 25,783

Deposits from banks and finance companies in Singapore include the minimum cash balances maintained by banks and finance companies with the Authority as required under the Banking Act (Cap. 19, 2008 Revised Edition) and the Finance Companies Act (Cap. 108, 2011 Revised Edition) respectively. Deposits from securities companies represent statutory deposits from holders of capital markets services licences required under the Securities and Futures (Licensing and Conduct of Business) Regulations.

18 MAS BILLS, PROVISIONS AND OTHER LIABILITIES

18.1 As part of the Authority’s money market operations to manage the liquidity in the banking system, the Authority issues its own short-term bills.

18.2 Provisions have been made for contingencies under Section 6(2) of the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition). Other liabilities include borrowings from banks, borrowings under reverse repurchase agreements, creditors, Sukuk payable, accounts payable and accruals.

18.3 During the financial year ended 31 March 2016, SSPL, a wholly-owned subsidiary of the Authority, issued $140 million (2015: $140 million) Sukuk trust certificates with one year maturity and an income distribution rate of 1.28% (2015: 0.39%) per annum. The Sukuk issuance by SSPL is structured on the sale-and-leaseback or Al Ijarah of property assets of the Authority. Under agreements with SSPL, the Authority will sell, leaseback, provide a purchase undertaking of the property assets and receive from and make periodic payments to SSPL.

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19 AMOUNTS DUE TO SINGAPORE GOVERNMENT

19.1 The amounts due to the Singapore Government comprise the following:

in $ millions 2016 2015

Amounts due to Singapore Government, arising from Repurchase Agreements 3,051 2,797 Balances and Deposits of Singapore Government 122,248 113,318 125,299 116,115

19.2 Contribution to the Consolidated Fund is in accordance with the Statutory Corporations (Contributions to Consolidated Fund) Act (Cap. 319A, 2004 Revised Edition) and is based on 17% (2015: 17%) of the net profit for the year. In the financial year ended 31 March 2016, no contribution to the Consolidated Fund (2015: $nil) is payable as the cumulative loss from previous financial years is brought forward and offset against the net profit for the year.

20 STATUTORY DEPOSITS OF INSURANCE COMPANIES, REMITTANCE LICENSEES AND CAPITAL MARKETS SERVICES LICENSEES

Statutory bank deposits, guarantees and Singapore Government bonds of insurance companies, remittance licensees and capital markets services licensees, are retained by the Authority under the Insurance Act (Cap. 142, 2002 Revised Edition), the Money-changing and Remittance Businesses Act (Cap. 187, 2008 Revised Edition) and the Securities and Futures Act (Cap. 289, 2006 Revised Edition) respectively, and in the events specified, dealt with accordingly under the respective Acts.

21 COMMITMENTS

21.1 International Monetary Fund (IMF)

a) On 15 December 2010, the IMF’s Board of Governors passed a resolution that would double the Fund’s total quotas and result in a major realignment of quota shares among members. In February 2016, Singapore paid up 25% of its full quota increase. As at 31 March 2016, the unpaid portion of the Singapore quota due to IMF under Section 4 of Article III of the Articles of Agreement is $5,328 million (31 March 2015: $1,669 million).

b) On 20 April 2012, the Authority announced that Singapore would make a bilateral contingent loan of US$4.0 billion ($5.4 billion) (31 March 2015: US$4.0 billion [$5.5 billion]) to the IMF as part of the broader international effort to boost IMF’s resources and strengthen global economic and financial stability.

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c) As a participant in the IMF’s ‘New Arrangements to Borrow’ (NAB), the Authority undertakes to provide a credit line in the event of a financial emergency as specified by the NAB. With the quota increase paid in February 2016, Singapore’s NAB commitment decreased from SDR1,277 million to SDR649 million. As at 31 March 2016, the loans granted by the Authority under the NAB totalled SDR118 million ($224 million) (31 March 2015: SDR131 million [$247 million]). The remaining undrawn credit is SDR531 million ($1,007 million) as at 31 March 2016 (31 March 2015: SDR1,146 million [$2,169 million]).

d) During the financial year ended 31 March 2014, the Authority received SDR10.3 million ($20.1 million) being Singapore’s share of the second distribution of SDR1,750 million ($3,402 million) by IMF arising from the profits made in the IMF’s gold sales. Together with the Authority’s share of SDR4.1 million ($8 million) from the first distribution received during the financial year ended 31 March 2013, Singapore pledged to contribute its share of both distributions to the Poverty Reduction and Growth Trust (“PRGT”) subsidy account, subject to legislative amendments.

21.2 Bank for International Settlements (BIS)

The Authority has a commitment, amounting to SDR16.1 million ($30.6 million) as at 31 March 2016 (31 March 2015: SDR16.1 million [$30.5 million]), in respect of the uncalled portion of its shareholding in the BIS.

21.3 Repurchase Agreements with Central Banks and Monetary Authority

The Authority entered into bilateral repurchase agreements totalling US$5,500 million ($7,406 million) (31 March 2015: US$5,500 million [$7,545 million]) with various Asian central banks and a monetary authority to provide liquidity assistance in times of emergency. For the financial year ended 31 March 2016, there was no request for liquidity assistance from any counterpart.

21.4 Currency Swap Arrangements with Central Banks and Monetary Authority

a) The Authority renewed the bilateral currency swap arrangement of CNY300 billion ($64 billion) with the People’s Bank of China for a further term of three years with effect from 7 March 2016. The arrangement allows the Authority to provide Chinese Yuan liquidity to financial institutions in Singapore for trade and financial stability purposes. As at 31 March 2016, the Authority has a currency swap of CNY10 billion ($2.1 billion) (31 March 2015: CNY10 billion [$2.2 billion]) with the People’s Bank of China.

b) The Authority is Singapore’s Swap Providing / Requesting Party in the Chiang Mai Initiative Multilateralisation (CMIM) Agreement involving the ASEAN member states, China (including the Hong Kong Monetary Authority, China), Japan and Korea. The CMIM Agreement, effective from 24 March 2010, provides financial support through

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currency swap transactions, to address balance of payments and short-term liquidity difficulties in the region, and supplements existing international financial arrangements. In May 2012, the Chiang Mai Initiative Multilateralisation (CMIM) members agreed to strengthen the regional financial safety net and double the total size of the currency swap transactions with members to US$240 billion. The Authority’s commitment is US$9,104 million ($12,259 million) (31 March 2015: US$9,104 million [$12,489 million]) and the Authority can swap Singapore dollars for US dollars up to 2.5 times Singapore’s commitment.

c) The Authority and the Bank of Japan, acting as the agent for the Minister of Finance of Japan, signed the third Bilateral Swap Arrangement (BSA) on 21 May 2015. Under the agreement, the Authority can swap Singapore dollars for US dollars up to US$3,000 million ($4,040 million) while the Bank of Japan can swap Japanese Yen for up to US$1,000 million ($1,347 million).

d) The Authority is a participant in the multilateral ASEAN Swap Arrangement (ASA) together with other ASEAN central banks and a monetary authority to provide short- term foreign exchange liquidity support for member countries that may experience balance of payments difficulties. In November 2015, the ASA was renewed for an additional two years up to 16 November 2017. Under this agreement, the Authority’s commitment is US$300 million ($404 million) (31 March 2015: US$300 million [$412 million]).

e) Aside from the CNY swap with the People’s Bank of China, there was no other drawdown of any of the currency swap arrangements, in note 21.4, in financial years ended 31 March 2015 and 31 March 2016.

21.5 Liquidity Loan Facility

The Authority entered into an agreement with the Singapore Deposit Insurance Corporation Limited (SDIC) on 9 February 2012 where the Authority may provide the SDIC a contingent liquidity facility of up to $20 billion (31 March 2015: $20 billion), in the event a Deposit Insurance Scheme member fails and liquidity is needed for compensation payments to insured depositors. There was no request and drawdown on the facility in financial years ended 31 March 2015 and 31 March 2016.

21.6 Capital Expenditure Commitments

Capital expenditure relating to fixed assets not provided for in the consolidated financial statements is as follows:

in $ millions 2016 2015

Amount contracted for 21 19

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21.7 Leases

a) Future minimum lease payments under non-cancellable operating leases are as follows:

in $ millions 2016 2015

Less than 1 year 2 1 1 to 5 years 2 2 4 3

b) Future minimum lease rental receipts under non-cancellable operating leases are as follows:

in $ millions 2016 2015

Less than 1 year 7 8 1 to 5 years 7 6 14 14

22 FINANCIAL RISK MANAGEMENT

22.1 The Risk Committee, chaired by an independent Board Director, assists the Board of Directors in providing oversight and guidance over the management of risks assumed by the Authority. This encompasses the management of financial risks inherent in the Authority’s investment portfolios, amongst other organisational risks faced by the Authority.

22.2 The Risk Management Department provides senior management and the Risk Committee with regular reports of the risk profiles of the Authority’s investments. These reports cover risk measurement and analysis of the Authority’s investment portfolios. The department also formulates risk policies and controls, and performs independent risk monitoring of the portfolios in accordance with the stipulated investment guidelines.

22.3 Market Risk

a) Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices and includes currency, interest rate and other price risks.

i) Currency risk is the risk of loss on foreign assets and liabilities arising from changes in foreign exchange rates.

ii) Interest rate risk is the risk of loss arising from changes in market interest rates.

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iii) Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

b) Market risk is managed through regular monitoring of the market risk exposure of the Authority’s investments, the diversification of the Authority’s investments across different markets, and the establishment of investment risk tolerance and controls at both the aggregate and individual portfolio levels.

22.4 Credit Risk

a) Credit risk is the risk of loss arising from a party’s failure to discharge an obligation under a financial contract and includes counterparty and issuer credit risk.

b) The Authority’s credit risks are managed by transacting with entities of acceptable creditworthiness within assigned limits. Credit risks are also mitigated by diversifying credit exposures across counterparties and issuers and through collateral arrangements with counterparties whom the Authority has signed the International Swaps and Derivatives Association (ISDA) Credit Support Annex.

c) The Authority manages issuer credit risk by imposing minimum credit rating requirements on the investment of fixed income securities. Single issuer limits are placed to control the credit exposure to any one issuer and to mitigate the extent of loss resulting from a default.

22.5 Country Risk

The Authority’s foreign assets are exposed to country credit risk arising from political, economic and financial events in the country of investment. Country limits are established to control the Authority’s credit risk exposure to individual countries.

22.6 Liquidity Risk

Liquidity risk is the risk arising from the inability to sell a financial asset at close to its fair value at short notice due to inadequate market depth or market disruptions. The Authority manages liquidity risk by investing mostly in liquid financial instruments and markets, and imposing limits on investments to ensure sufficient diversification and through regular monitoring of the liquidity profile of the Authority’s investments.

108 Monetary Authority of Singapore NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

23 RELATED PARTY TRANSACTIONS

23.1 The Financial Sector Development Fund (the “Fund”) maintains a non-interest bearing current account with the Authority to facilitate grant disbursements. The Fund’s current account balance with the Authority as at 31 March 2016 was $0.7 million (31 March 2015: $0.4 million).

23.2 The Authority also accepted deposits from the Fund, in the ordinary course of business and at arm’s length, incurring interest expense disclosed below:

in $ thousands 2016 2015

Interest Expense 557 282

The Fund’s deposit balance with the Authority as at 31 March 2016 was $nil million (31 March 2015: $126 million).

24 SEGMENT REPORTING

Owing to their integrated nature, the Authority’s operations, including those of its subsidiary, SSPL, comprise one main operating segment only, i.e. the conduct of monetary policy, issuance of currency, management of the official foreign reserves and acting as the banker to and financial agent of the Government, for segment reporting purposes. In addition, the Authority’s operations are mainly in one geographical area, Singapore. All other segment information are below the quantitative thresholds for separate disclosure.

25 NEW OR REVISED ACCOUNTING STANDARDS AND INTERPRETATIONS

New or revised accounting standards and interpretations to existing standards have been issued that are relevant for the Authority’s accounting periods beginning after 1 April 2015 or later periods and which the Authority has not early adopted. The Authority does not expect the following revised accounting standards that are applicable, to have a significant impact on the Authority’s consolidated financial statements.

Effective for annual periods beginning on or after 1 January 2016

Amendments to FRS 1 Presentation of Financial Statements: Disclosure Initiative

The amendments to FRS 1 clarify guidance on materiality and aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies.

Annual Report 2015/16 109 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

Amendments to FRS 16 Property, Plant and Equipment

The amendments to FRS 16 explicitly state that revenue-based methods of depreciation are not appropriate for property, plant and equipment as they may reflect factors other than the diminution of economic benefits of the asset such as technical or commercial obsolescence or wear and tear while an asset remains idle.

Effective for annual periods beginning on or after 1 January 2017

Amendments to FRS 7 Statement of Cash Flows: Disclosure Initiative

The amendments to FRS 7 require additional disclosures to enable the user of financial statements to evaluate changes in liabilities arising from financing activities, such as providing a reconciliation between opening and closing balances in the balance sheet for liabilities arising from financing activities, and its link to the statement of cash flows.

26 AUTHORISATION OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements for the year ended 31 March 2016 were authorised by the Board of Directors for issuance and signed by Chairman and Managing Director on 24 June 2016.

110 Monetary Authority of Singapore Annual Report 2015/16 111 80 Monetary Authority of Singapore STATISTICAL ANNEXES

A. MONETARY STATISTICS 114 A1. Money Supply 115 A2. Official Foreign Reserves 116 A3. Exchange Rates 117 A4. Domestic Interest Rates

B. COMMERCIAL BANKS 118 B1. Assets And Liabilities 119 B2. Loans And Advances By Industrial Classification 120 B3. Types Of Loans And Advances To Non-Bank Customers 121 B4. Types Of Deposits Including S$NCDS 122 B5. Liquidity Position

C. FINANCE COMPANIES 123 C1. Assets And Liabilities

D. MERCHANT BANKS 124 D1. Consolidated Assets And Liabilities 125 D2. Assets And Liabilities Of Domestic Unit Operations

E. INSURANCE INDUSTRY 126 E1. Assets And Premiums

F. NON-BANK FINANCIAL INSTITUTIONS 127 F1. Central Provident Fund Board

G. DOMESTIC CAPITAL MARKET 128 G1. Net Funds Raised In The Domestic Capital Market

H. ASIAN DOLLAR MARKET 129 H1. Assets And Liabilities 130 H2. Maturity Transformation By Asian Currency Units

Annual Report 2015/16 113 114 A.1 MONETARY STATISTICS: Monetary Authority ofSingapore MONEY SUPPLY

S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Money Supply (M1) 63,938.6 75,703.8 93,472.1 112,487.0 130,591.9 140,709.1 154,597.3 160,217.7 160,445.8 159,733.9 Currency in active circulation 1 16,668.5 18,997.4 20,216.5 22,299.5 24,690.3 26,361.3 28,851.6 31,506.9 34,042.3 34,609.6 Demand deposits 47,270.1 56,706.4 73,255.6 90,187.5 105,901.6 114,347.8 125,745.7 128,710.8 126,403.5 125,124.3

Quasi-money 233,620.3 257,707.3 277,735.8 290,609.1 312,766.2 334,683.4 341,310.5 352,213.1 359,793.9 373,310.3 Fixed deposits 151,731.7 155,121.9 156,731.1 154,417.3 160,699.6 175,270.8 171,989.3 172,712.0 174,465.4 186,098.4 Savings and other deposits 81,822.9 102,567.4 121,004.7 136,171.8 151,901.6 159,322.4 168,838.4 179,110.3 184,606.5 186,620.2 S$NCDs 65.7 18.0 0.0 20.0 165.0 90.2 482.8 390.8 722.0 591.7

Money Supply (M2) 297,558.9 333,411.1 371,207.9 403,096.1 443,358.1 475,392.5 495,907.8 512,430.8 520,239.7 533,044.2 Net deposits with finance 9,196.0 8,976.4 7,318.1 7,013.2 8,308.2 10,522.9 10,992.2 11,735.6 12,704.8 12,480.8 companies

Money Supply (M3) 306,754.9 342,387.5 378,526.0 410,109.3 451,666.3 485,915.4 506,900.0 524,166.4 532,944.5 545,525.0

1 Figures exclude commemorative, numismatic and bullion coins issued by the Monetary Authority of Singapore and cash held by commercial banks and other financial institutions. The Board of Commissioners of Currency, Singapore, merged with the Monetary Authority of Singapore in October 2002. A.2 MONETARY STATISTICS: OFFICIAL FOREIGN RESERVES 1

S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total Foreign Reserves 234,545.6 250,346.0 263,955.4 288,954.1 308,403.2 316,744.2 344,729.2 340,438.1 350,990.8 331,526.1

Gold & Foreign Exchange 233,913.1 249,546.1 261,374.6 286,563.3 305,589.5 313,987.3 341,734.8 337,676.1 348,420.5 328,694.3

Reserve Position in the IMF 128.6 255.8 375.5 421.0 1,080.8 1,115.8 1,296.7 1,084.1 852.6 1,419.5

Special Drawing Rights (SDRs) 503.9 544.1 2,205.3 1,969.8 1,732.9 1,641.1 1,697.7 1,677.9 1,717.7 1,412.3

Total Foreign Reserves (US$ million) 162,956.8 174,196.3 187,809.1 225,754.2 237,737.0 259,307.1 273,065.1 256,860.4 247,747.4 246,195.8

1 With effect from May 1999, the book value of foreign reserve assets are translated at market exchange rates prevailing at the end of each reporting month. Annual Report 2015/16 115 116 A.3 MONETARY STATISTICS: Monetary Authority ofSingapore EXCHANGE RATES

S$ Per Foreign Currency 1st Qtr Period Average 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US Dollar 1.5071 1.4148 1.4545 1.3635 1.2579 1.2497 1.2513 1.2671 1.3748 1.4049 100 Japanese Yen 1.2806 1.3738 1.5562 1.5543 1.5780 1.5672 1.2840 1.1996 1.1364 1.2185 Euro 2.0638 2.0771 2.0242 1.8095 1.7495 1.6071 1.6621 1.6837 1.5267 1.5484 Pound Sterling 3.0161 2.6162 2.2737 2.1073 2.0161 1.9803 1.9573 2.0873 2.1023 2.0110 Swiss Franc 1.2563 1.3090 1.3407 1.3089 1.4201 1.3332 1.3503 1.3859 1.4295 1.4129 Australian Dollar 1.2624 1.2016 1.1473 1.2524 1.2971 1.2940 1.2107 1.1431 1.0339 1.0126 100 Korean Won 0.1622 0.1306 0.1143 0.1180 0.1135 0.1109 0.1144 0.1204 0.1215 0.1168 100 New Taiwan Dollar 4.5870 4.4874 4.4023 4.3292 4.2798 4.2262 4.2155 4.1812 4.3298 4.2390 Hong Kong Dollar 0.1932 0.1817 0.1876 0.1755 0.1616 0.1611 0.1613 0.1634 0.1773 0.1807 Malaysian Ringgit 0.4384 0.4247 0.4126 0.4234 0.4111 0.4046 0.3973 0.3873 0.3534 0.3344 Thai Baht 0.0436 0.0424 0.0424 0.0430 0.0413 0.0402 0.0408 0.0390 0.0402 0.0394 100 Indonesian Rupiah 0.0165 0.0147 0.0140 0.0150 0.0143 0.0133 0.0120 0.0107 0.0103 0.0104

Note: Currencies quoted are those frequently requested from the Authority. A.4 MONETARY STATISTICS: DOMESTIC INTEREST RATES

Per Cent Per Annum 1st Qtr Period Average 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Banks1 Prime Lending Rate 5.33 5.38 5.38 5.38 5.38 5.38 5.38 5.35 5.35 5.35 Fixed Deposit Rate 3-month 0.53 0.42 0.29 0.21 0.17 0.14 0.14 0.14 0.17 0.19 6-month 0.64 0.54 0.37 0.30 0.24 0.19 0.20 0.21 0.23 0.25 12-month 0.85 0.73 0.56 0.48 0.40 0.30 0.32 0.32 0.33 0.35 Savings Deposit Rate 0.25 0.23 0.18 0.14 0.12 0.11 0.10 0.11 0.12 0.14

Finance Companies 2 Fixed Deposit Rate 3-month 0.75 0.49 0.29 0.22 0.16 0.16 0.19 0.18 0.22 0.30 6-month 1.09 0.59 0.33 0.27 0.23 0.24 0.26 0.25 0.29 0.38 12-month 1.57 0.90 0.62 0.54 0.50 0.48 0.53 0.53 0.55 0.58 Savings Deposit Rate 0.33 0.26 0.25 0.25 0.22 0.17 0.17 0.17 0.17 0.17

S$ SIBOR 1-month 2.66 1.14 0.44 0.38 0.30 0.31 0.32 0.36 0.81 1.09 3-month 2.76 1.33 0.70 0.56 0.41 0.39 0.38 0.41 0.92 1.24 Annual Report 2015/16

US$ LIBOR 1-month 5.25 2.67 0.33 0.27 0.23 0.24 0.19 0.16 0.20 0.43 3-month 5.30 2.91 0.69 0.34 0.34 0.43 0.27 0.23 0.32 0.62 6-month 5.25 3.04 1.12 0.52 0.51 0.69 0.41 0.33 0.48 0.87

1 Average of 10 leading banks. Note: Interest rates for banks (except for Prime Lending Rate) and finance companies refer to average of end of month rates. 117 2 Average of all finance companies. Note: Domestic interbank rates have been discontinued with effect from 1 January 2014 and replaced with S$ SIBOR. US$ SIBOR rates have been also replaced with the US$ LIBOR, the most widely-used US$ interest rate benchmark, so as to align with the larger global US$ market. 118 B.1 COMMERCIAL BANKS: Monetary Authority ofSingapore ASSETS AND LIABILITIES

S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Assets Cash in hand 1,772.9 1,739.8 2,026.8 2,219.9 2,796.4 2,756.0 2,807.5 2,917.1 4,396.2 3,673.5 Balances with MAS 9,530.4 13,466.0 13,999.9 15,878.7 17,815.3 19,503.3 32,107.0 20,311.6 22,218.5 23,255.6 S$NCDs held 0.0 0.0 0.0 0.0 9.9 201.8 210.0 0.0 425.0 237.5 Amounts due from banks 194,828.8 217,089.8 227,923.9 232,272.3 216,223.0 184,902.7 142,986.5 183,016.5 170,139.1 189,021.4 In Singapore 59,924.1 52,572.1 57,188.2 77,972.8 58,857.6 44,059.5 27,601.4 32,391.8 26,960.5 32,304.0 ACUs 58,945.9 73,134.5 87,208.0 69,152.1 62,125.1 44,061.6 29,216.8 46,889.1 51,660.2 55,875.4 Outside Singapore 75,958.8 91,383.2 83,527.7 85,147.4 95,240.3 96,781.5 86,168.3 103,735.6 91,518.4 100,842.0 Investments 91,943.8 98,715.0 122,968.0 130,081.3 137,711.5 153,318.2 167,478.7 184,960.5 194,890.5 198,824.7 In Singapore 78,349.4 84,826.2 98,742.6 107,526.2 118,078.4 129,130.0 139,193.4 154,168.8 149,350.6 151,065.2 Government securities 59,934.1 66,696.1 81,318.8 84,853.4 91,417.5 98,422.4 98,213.9 106,234.3 108,845.3 110,292.1 Others 18,415.3 18,130.1 17,423.8 22,672.8 26,660.9 30,707.6 40,979.5 47,934.5 40,505.3 40,773.1 Outside Singapore 13,594.3 13,889.0 24,225.6 22,555.2 19,633.2 24,188.2 28,285.3 30,791.9 45,539.8 47,759.3 Loans and advances to non-bank 233,393.9 272,175.4 281,296.8 322,743.8 420,455.5 490,706.5 574,274.4 607,200.5 599,756.0 590,578.7 customers of which bills financing 9,035.2 9,489.7 11,308.5 20,050.4 44,582.2 56,292.0 79,657.4 75,343.9 52,846.8 42,070.6 Fixed and other assets 51,389.2 65,112.3 58,598.7 78,411.4 60,799.7 59,620.6 53,362.6 61,236.0 65,695.4 69,427.7

Liabilities Paid-up capital and reserves 41,436.9 51,315.7 54,967.6 62,441.7 64,845.4 66,305.4 66,291.7 70,995.6 76,103.1 84,633.3 Deposits of non-bank customers 314,985.8 347,507.4 391,495.1 433,757.8 483,110.3 518,840.7 537,582.9 550,363.9 560,011.5 573,399.3 S$NCDs issued 65.7 18.0 0.0 20.0 175.0 292.0 692.8 390.8 1,147.0 829.2 Amounts due to banks 165,520.8 184,405.1 176,394.4 188,564.9 226,427.6 244,892.2 293,986.6 339,195.4 318,251.5 311,520.9 In Singapore 17,225.7 18,283.9 13,869.4 14,189.7 9,900.5 12,088.7 11,244.2 12,876.3 11,353.0 12,982.4 ACUs 95,867.3 92,313.0 113,588.1 119,350.8 147,478.7 162,746.8 206,129.6 224,430.8 211,980.9 204,075.9 Outside Singapore 52,427.8 73,808.1 48,936.9 55,024.4 69,048.4 70,056.7 76,612.7 101,888.2 94,917.6 94,462.6 Bills payable 1,254.3 904.0 1,023.4 1,096.3 1,495.7 1,778.4 1,624.2 1,515.8 1,652.8 1,786.2 Other liabilities 59,595.5 84,148.2 82,933.6 95,726.8 79,757.3 78,900.3 73,048.7 97,180.8 100,354.8 102,850.2

Total Assets/Liabilities 582,859.0 668,298.4 706,814.2 781,607.4 855,811.4 911,009.0 973,226.8 1,059,642.3 1,057,520.6 1,075,019.1 S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Assets Cash in hand 1,772.9 1,739.8 2,026.8 2,219.9 2,796.4 2,756.0 2,807.5 2,917.1 4,396.2 3,673.5 Balances with MAS 9,530.4 13,466.0 13,999.9 15,878.7 17,815.3 19,503.3 32,107.0 20,311.6 22,218.5 23,255.6 S$NCDs held 0.0 0.0 0.0 0.0 9.9 201.8 210.0 0.0 425.0 237.5 Amounts due from banks 194,828.8 217,089.8 227,923.9 232,272.3 216,223.0 184,902.7 142,986.5 183,016.5 170,139.1 189,021.4 In Singapore 59,924.1 52,572.1 57,188.2 77,972.8 58,857.6 44,059.5 27,601.4 32,391.8 26,960.5 32,304.0 ACUs 58,945.9 73,134.5 87,208.0 69,152.1 62,125.1 44,061.6 29,216.8 46,889.1 51,660.2 55,875.4 Outside Singapore 75,958.8 91,383.2 83,527.7 85,147.4 95,240.3 96,781.5 86,168.3 103,735.6 91,518.4 100,842.0 Investments 91,943.8 98,715.0 122,968.0 130,081.3 137,711.5 153,318.2 167,478.7 184,960.5 194,890.5 198,824.7 In Singapore 78,349.4 84,826.2 98,742.6 107,526.2 118,078.4 129,130.0 139,193.4 154,168.8 149,350.6 151,065.2 Government securities 59,934.1 66,696.1 81,318.8 84,853.4 91,417.5 98,422.4 98,213.9 106,234.3 108,845.3 110,292.1 Others 18,415.3 18,130.1 17,423.8 22,672.8 26,660.9 30,707.6 40,979.5 47,934.5 40,505.3 40,773.1 Outside Singapore 13,594.3 13,889.0 24,225.6 22,555.2 19,633.2 24,188.2 28,285.3 30,791.9 45,539.8 47,759.3 Loans and advances to non-bank 233,393.9 272,175.4 281,296.8 322,743.8 420,455.5 490,706.5 574,274.4 607,200.5 599,756.0 590,578.7 customers of which bills financing 9,035.2 9,489.7 11,308.5 20,050.4 44,582.2 56,292.0 79,657.4 75,343.9 52,846.8 42,070.6 Fixed and other assets 51,389.2 65,112.3 58,598.7 78,411.4 60,799.7 59,620.6 53,362.6 61,236.0 65,695.4 69,427.7

Liabilities Paid-up capital and reserves 41,436.9 51,315.7 54,967.6 62,441.7 64,845.4 66,305.4 66,291.7 70,995.6 76,103.1 84,633.3 Deposits of non-bank customers 314,985.8 347,507.4 391,495.1 433,757.8 483,110.3 518,840.7 537,582.9 550,363.9 560,011.5 573,399.3 S$NCDs issued 65.7 18.0 0.0 20.0 175.0 292.0 692.8 390.8 1,147.0 829.2 Amounts due to banks 165,520.8 184,405.1 176,394.4 188,564.9 226,427.6 244,892.2 293,986.6 339,195.4 318,251.5 311,520.9 In Singapore 17,225.7 18,283.9 13,869.4 14,189.7 9,900.5 12,088.7 11,244.2 12,876.3 11,353.0 12,982.4 ACUs 95,867.3 92,313.0 113,588.1 119,350.8 147,478.7 162,746.8 206,129.6 224,430.8 211,980.9 204,075.9 Outside Singapore 52,427.8 73,808.1 48,936.9 55,024.4 69,048.4 70,056.7 76,612.7 101,888.2 94,917.6 94,462.6 Bills payable 1,254.3 904.0 1,023.4 1,096.3 1,495.7 1,778.4 1,624.2 1,515.8 1,652.8 1,786.2 Other liabilities 59,595.5 84,148.2 82,933.6 95,726.8 79,757.3 78,900.3 73,048.7 97,180.8 100,354.8 102,850.2

Total Assets/Liabilities 582,859.0 668,298.4 706,814.2 781,607.4 855,811.4 911,009.0 973,226.8 1,059,642.3 1,057,520.6 1,075,019.1

B.2 COMMERCIAL BANKS: LOANS AND ADVANCES BY INDUSTRIAL CLASSIFICATION

S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Agriculture, mining and quarrying 232.1 283.2 260.3 382.2 1,719.7 2,104.3 4,905.9 5,536.0 5,611.6 5,747.2

Manufacturing 10,225.8 11,786.1 10,547.3 10,917.6 19,023.5 27,166.3 31,601.6 29,614.7 26,000.9 26,972.1

Building and construction 37,508.9 50,006.6 48,940.6 53,593.9 67,304.4 78,704.0 91,274.7 103,712.6 119,405.2 119,983.6

Housing and bridging loans 73,139.1 79,587.0 91,429.5 112,381.3 131,106.5 152,003.0 166,542.0 177,434.6 184,680.6 185,372.9

General commerce 22,269.0 24,861.6 23,357.4 30,982.9 48,809.6 57,349.8 75,888.3 78,082.4 65,954.1 56,798.3

Transport, storage and 9,129.8 9,211.7 10,612.3 9,018.1 11,883.2 13,089.2 17,162.7 20,045.3 20,810.4 19,252.9 communication

Non-bank financial institutions 31,360.4 33,506.1 32,465.3 37,984.6 55,550.9 64,895.1 76,387.4 80,984.1 68,697.9 70,488.7

Professional and private individuals 35,070.9 37,872.3 39,476.3 42,396.1 52,669.8 60,451.0 65,688.0 68,751.3 67,493.3 66,153.7

Others 14,458.1 25,060.6 24,208.0 25,087.2 32,387.8 34,943.8 44,823.9 43,039.5 41,101.8 39,809.3 Annual Report 2015/16

Total 233,393.9 272,175.4 281,296.8 322,743.8 420,455.5 490,706.5 574,274.4 607,200.5 599,756.0 590,578.7 119 120 B.3 COMMERCIAL BANKS: Monetary Authority ofSingapore TYPES OF LOANS AND ADVANCES TO NON-BANK CUSTOMERS

S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Overdrafts 10,437.2 10,264.5 9,973.0 8,918.7 8,591.8 9,322.5 9,986.6 9,264.5 9,525.3 8,960.0

Bills discounting 9,035.2 9,489.7 11,308.5 20,050.4 44,582.2 56,292.0 79,657.4 75,343.8 52,846.9 42,070.6

Trust receipts 6,431.8 6,504.0 4,874.3 5,374.6 6,727.3 7,429.4 8,819.7 8,376.0 9,419.6 8,654.8

Term loans and others 207,489.8 245,917.2 255,140.9 288,400.2 360,554.2 417,662.6 475,810.7 514,216.2 527,964.2 530,893.3

Total 233,393.9 272,175.4 281,296.8 322,743.8 420,455.5 490,706.5 574,274.4 607,200.5 599,756.0 590,578.7 B.4 COMMERCIAL BANKS: TYPES OF DEPOSITS INCLUDING S$NCDS

S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Demand 52,080.2 62,100.4 81,047.0 100,394.2 120,133.3 130,965.7 142,676.7 147,007.3 141,953.0 141,612.2

Fixed 175,421.2 175,646.9 179,571.8 185,564.8 197,609.5 213,657.9 210,490.5 207,959.3 216,838.7 228,977.5

Savings 86,496.0 109,033.5 129,995.1 146,802.5 163,782.5 171,785.5 181,865.7 192,101.8 197,140.1 198,664.5

S$NCDs (net) 65.7 18.0 0.0 20.0 165.0 90.2 482.8 390.8 722.0 591.7

Others 988.5 726.6 881.3 996.3 1,585.1 2,431.7 2,549.9 3,295.4 4,079.6 4,145.1

Total 315,051.6 347,525.4 391,495.1 433,777.8 483,275.3 518,930.9 538,065.7 550,754.7 560,733.5 573,991.0 Annual Report 2015/16 121 122 B.5 COMMERCIAL BANKS: Monetary Authority ofSingapore LIQUIDITY POSITION

S$ Million 1st Qtr Period Average 2016*

Liquid Assets (a) Minimum Requirement 167,843.0 (b) Total Actual Liquid Assets 310,538.6 (c) Free Liquid Assets (b) - (a) 142,695.6

* In view of changes to the local liquidity regulations from 1 Jan 2016, the content of Table B.5 is updated accordingly. Please contact us at [email protected] if you have any queries. C.1 FINANCE COMPANIES: ASSETS AND LIABILITIES

S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Assets Reserves with MAS 274.9 274.8 220.1 215.1 251.9 318.0 328.2 357.9 385.7 381.2 Deposits with banks and other 881.7 988.5 1,809.4 1,885.0 1,176.2 1,810.1 1,369.2 1,495.4 1,895.9 1,804.1 financial institutions Banks 881.7 988.5 1,809.4 1,885.0 1,176.2 1,810.1 1,369.2 1,495.4 1,895.9 1,804.1 Other institutions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Loans and advances 10,179.7 9,743.1 8,092.0 8,058.2 9,460.2 11,311.5 11,653.9 12,385.4 13,251.7 13,077.2 Housing loans 1,767.1 1,587.6 1,226.4 1,485.5 1,517.1 1,402.8 1,394.0 1,448.4 1,475.8 1,465.0 Hire purchase 2,713.1 2,755.6 2,361.3 2,069.9 2,037.7 2,089.9 1,891.5 1,779.4 1,978.1 2,009.5 Lease finance 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Others 5,699.4 5,399.9 4,504.3 4,502.8 5,905.4 7,818.8 8,368.4 9,157.6 9,797.9 9,602.7 Securities and equities 1,277.7 1,456.9 1,453.7 1,259.3 1,161.9 1,414.7 1,522.5 1,613.0 1,735.6 1,745.3 Other assets 167.9 123.0 116.7 106.0 115.1 113.1 112.0 124.0 140.9 115.7

Liabilities Capital and reserves 1,683.3 1,713.0 1,824.9 1,926.2 1,999.2 2,104.8 2,109.6 2,214.2 2,242.4 2,272.2 Deposits 10,087.2 9,975.7 9,111.0 8,891.4 9,481.0 12,347.6 12,396.1 13,295.7 14,667.1 14,350.1 Fixed 9,939.5 9,799.7 8,861.1 8,614.6 9,218.7 11,909.9 11,887.0 12,897.2 14,313.5 14,022.4 Annual Report 2015/16 Savings 140.0 162.4 238.2 266.6 252.7 220.9 240.3 217.3 197.9 193.5 Others 7.7 13.6 11.7 10.2 9.7 216.8 268.7 181.2 155.8 134.1 Borrowings 256.9 134.9 97.5 79.6 45.6 22.6 17.0 6.9 4.3 3.6 Other liabilities 754.5 762.8 658.5 626.4 639.5 492.5 463.0 458.9 496.0 497.6

Total Assets/Liabilities 12,781.8 12,586.4 11,691.9 11,523.6 12,165.3 14,967.5 14,985.7 15,975.7 17,409.8 17,123.5 123 124 D.1 MERCHANT BANKS: Monetary Authority ofSingapore CONSOLIDATED ASSETS AND LIABILITIES 1

S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Assets Amounts due from banks 36,261.8 32,093.5 22,327.0 22,604.2 22,815.1 21,646.5 21,226.5 19,532.4 25,050.5 24,745.2 In Singapore 660.5 1,262.2 1,488.4 2,254.7 2,567.3 3,170.6 3,433.8 3,556.6 2,803.5 2,617.2 Asian Currency Units 20,688.9 13,853.3 7,153.9 5,097.9 4,615.0 5,300.3 5,212.7 7,432.7 9,345.2 9,953.7 Outside Singapore 14,912.3 16,978.0 13,684.7 15,251.7 15,632.8 13,175.6 12,580.0 8,543.2 12,901.8 12,174.3 Loans and advances to non-bank 28,157.1 21,754.6 23,451.1 25,976.8 29,095.7 26,832.3 25,533.8 26,640.2 23,322.0 22,009.8 customers Securities and equities 21,072.0 13,182.7 24,484.6 36,100.0 28,618.0 38,303.3 32,642.1 43,415.1 50,320.9 37,222.0 Other assets 3,579.3 5,571.5 6,091.7 5,079.2 7,322.2 5,628.9 5,542.5 6,669.1 7,889.8 8,099.3

Liabilities Capital and reserves 9,164.4 8,443.2 8,855.7 9,510.2 9,983.6 12,168.2 12,381.3 12,560.9 13,024.6 12,484.0 Amounts due to banks 36,478.5 35,698.1 37,963.7 51,264.3 46,928.5 55,045.1 51,658.0 63,112.6 70,528.6 55,971.6 In Singapore 1,463.7 530.7 3,265.6 3,101.8 585.8 615.2 408.6 406.4 514.3 624.3 Asian Currency Units 19,614.0 17,419.1 13,138.0 22,920.9 23,772.5 22,413.9 20,349.2 21,296.9 23,184.9 19,108.7 Outside Singapore 15,400.7 17,748.2 21,560.0 25,241.5 22,570.2 32,016.0 30,900.2 41,409.4 46,829.4 36,022.5 Borrowings from non-bank customers 36,904.2 22,781.3 23,824.0 21,249.1 22,623.4 17,741.8 13,600.6 12,564.7 13,291.2 13,184.0 Other liabilities 6,523.2 5,679.7 5,711.0 7,736.8 8,315.7 7,456.0 7,305.0 8,018.6 9,738.7 10,436.8

Total Assets/Liabilities 89,070.2 72,602.3 76,354.4 89,760.3 87,851.1 92,411.0 84,944.9 96,256.8 106,583.2 92,076.3

1 Data are derived from the consolidation of merchant banks’ domestic and Asian dollar operations. D.2 MERCHANT BANKS: ASSETS AND LIABILITIES OF DOMESTIC UNIT OPERATIONS 1

S$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Assets Amounts due from banks 4,387.4 5,323.1 5,528.5 5,886.6 6,718.5 7,564.1 8,105.6 8,288.7 8,065.1 7,701.2 In Singapore 659.6 1,261.8 1,488.4 2,254.6 2,567.0 3,109.2 3,414.5 3,478.1 2,800.0 2,616.6 Asian Currency Units 3,112.0 3,062.9 2,988.7 2,368.8 2,539.6 2,894.1 3,520.2 4,063.2 4,558.0 4,369.3 Outside Singapore 615.8 998.4 1,051.3 1,263.2 1,611.9 1,560.8 1,170.9 747.3 707.1 715.4 Loans and advances to non-bank 1,138.5 781.7 845.6 1,917.8 1,660.0 1,738.0 1,475.6 1,428.6 1,434.1 1,290.9 customers Securities and equities 1,641.2 1,221.1 3,067.1 3,024.9 3,043.1 2,663.9 2,388.7 1,977.0 1,740.4 1,770.4 Other assets 1,170.7 1,469.6 769.0 601.1 715.6 792.8 554.9 565.4 839.8 949.5

Liabilities Capital and reserves 2,745.3 3,262.9 3,138.4 3,564.6 3,219.2 4,025.9 3,440.8 3,032.0 3,701.4 3,853.1 Amounts due to banks 3,944.6 3,647.8 6,039.7 6,453.8 7,439.2 7,318.0 7,639.8 7,709.2 6,972.4 6,482.8 In Singapore 1,449.3 527.9 1,340.2 649.2 553.3 578.5 389.7 386.6 500.1 610.8 Asian Currency Units 1,642.6 1,482.4 1,948.4 2,796.1 3,462.1 3,050.0 4,941.8 6,067.7 5,346.4 4,761.9 Outside Singapore 852.7 1,637.5 2,751.1 3,008.5 3,423.8 3,689.5 2,308.4 1,254.9 1,125.9 1,110.1 Borrowings from non-bank customers 521.9 341.6 318.2 360.9 457.7 395.3 332.2 297.4 282.0 283.8 Other liabilities 1,126.1 1,543.2 713.9 1,051.1 1,021.2 1,019.5 1,111.9 1,221.1 1,123.5 1,092.3 Annual Report 2015/16

Total Assets/Liabilities 8,337.8 8,795.5 10,210.2 11,430.4 12,137.2 12,758.7 12,524.7 12,259.7 12,079.3 11,712.0

1 Corporate financial advisory services, underwriting activities and operations in the gold market are not reflected in the data. 125 126 E.1 INSURANCE INDUSTRY: Monetary Authority ofSingapore ASSETS AND PREMIUMS

S$ Million March 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total Assets of Insurance Industry 128,777.4 115,047.7 135,801.3 149,335.3 161,114.8 174,860.1 179,692.7 197,401.9 209,581.4 210,652.9 (End Period) Direct Insurers 118,860.0 104,487.9 123,585.0 136,028.0 143,019.7 156,802.6 161,597.3 177,415.2 187,627.7 191,753.7 Professional Reinsurers 7,960.1 8,655.2 9,950.4 10,827.6 15,277.2 15,022.1 14,886.3 16,322.2 18,214.5 18,899.2 Captive Insurers 1,957.3 1,904.6 2,265.9 2,479.7 2,817.9 3,035.4 3,209.1 3,664.5 3,739.2 N.A.

General Business: Gross Premiums 1 Total General Business 6,105.4 6,829.3 7,436.2 8,580.0 9,820.4 10,416.5 11,102.4 11,768.1 12,996.8 3,157.6 Domestic Business 2,621.9 2,962.5 2,940.8 3,230.6 3,423.6 3,626.7 3,738.1 3,850.5 3,999.1 1,156.4 Offshore Business 3,483.5 3,866.8 4,495.4 5,349.4 6,396.8 6,789.8 7,364.3 7,917.6 8,997.7 2,001.2

Life Business: Premiums Premiums in Force (End Period) 7,660.8 8,347.5 9,719.1 11,374.9 12,412.7 13,663.6 15,073.2 16,587.7 18,862.1 20,080.1 New Business Premiums Annual Premium Policies 1,121.9 1,459.2 1,840.7 3,014.8 2,466.4 2,453.7 3,114.6 2,812.3 3,652.0 804.2 Single Premium Policies Life Insurance 9,031.7 8,038.2 6,501.6 7,276.7 7,253.4 6,423.6 7,397.1 9,038.1 10,118.6 2,227.9 Annuity 402.9 554.2 189.4 152.2 168.2 171.1 36.8 29.3 16.1 3.3

1 Figures for March 2016 does not include general captives and marine mutual insurers. N.A: Not available F.1 NON-BANK FINANCIAL INSTITUTIONS: CENTRAL PROVIDENT FUND BOARD S$ million 1st Qtr 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016**

Excess of contributions over 6,555.1 9,265.1 9,404.4 12,374.2 14,184.8 14,321.6 13,666.8 12,423.3 13,323.9 5,215.8 withdrawals Contributions (net of refunds) by 18,117.8 20,232.3 20,124.9 21,992.7 24,628.4 26,048.4 28,530.0 29,722.1 32,049.1 9,952.1 members1 Withdrawals (net of refunds) by members2 11,562.7 10,967.2 10,720.5 9,618.5 10,443.6 11,726.8 14,863.2 17,298.8 18,725.2 4,736.3 Approved housing schemes3 5,867.9 5,847.0 5,836.5 4,852.7 6,810.9 7,993.7 8,341.4 9,598.3 10,380.5 2,778.3 Under Section 15 and Section 25 of 3,081.0 2,799.8 2,622.9 2,628.9 2,909.4 3,112.2 3,967.0 4,265.6 5,155.9 1,231.2 CPF Act Medical schemes4 1,076.7 1,302.9 1,476.4 1,645.4 1,792.1 1,840.4 2,381.1 2,501.7 2,737.9 595.7 Others 1,537.1 1,017.5 784.7 491.5 -1,068.8 -1,219.5 173.7 933.2 450.9 131.1

Interest credited to members 4,228.0 5,455.1 6,092.6 6,709.8 7,472.7 8,290.6 9,144.2 9,971.9 10,834.5 2,944.6 Advance deposits with MAS5 17,874.2 14,167.3 15,408.0 18,765.9 19,935.0 19,119.1 18,636.3 20,327.6 20,838.8 6,101.1 Interest earnings from investments6 4,432.1 5,651.4 6,276.3 6,978.9 7,792.7 8,646.9 9,571.6 10,481.3 11,445.5 3,097.9 Holdings of Government Securities7 128,626.5 141,325.5 157,446.7 176,142.0 197,245.5 219,037.6 241,428.2 263,134.6 286,792.0 298,443.1 Members’ accounts 136,586.9 151,307.1 166,804.0 185,888.0 207,545.5 230,157.7 252,968.6 275,363.9 299,522.4 307,682.8

Source: Central Provident Fund Board 1 Contributions include dividends from Special Discounted Shares and Government Grants. Annual Report 2015/16 2 Withdrawals include transfers to / from Reserve Account / general moneys of the Fund. 3 Approved housing schemes include Public Housing and Residential Properties schemes. 4 Medical schemes includes Medisave, MediShield, Private Medical Insurance and ElderShield schemes. 5 Deposits placed with MAS during the year excludes: a) interests on bonds & interest on Advance Deposits retained as deposits by MAS; and b) conversions and redemptions of Government bonds. 6 Includes interest earned from investments held in funds that are administered by the CPF Board. This includes the Central Provident Fund, Lifelong Income Fund, MediShield Fund, Home Protection Fund and Dependants’ Protection Residual Fund.

127 7 Holdings exclude advance deposits with MAS.

** Provisional figures (unaudited) 128 G.1 DOMESTIC CAPITAL MARKET: Monetary Authority ofSingapore NET FUNDS RAISED IN THE DOMESTIC CAPITAL MARKET

S$ Million 1st Qtr 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

A Net funds raised by Government 22,837.3 17,526.1 16,793.2 23,742.4 41,075.2 39,864.3 60,985.5 59,242.2 11,581.5 6,356.4 1) Gross issue of Government 35,930.9 38,097.7 41,201.3 60,383.4 49,609.3 50,826.4 57,291.6 59,107.1 58,524.5 306,655.7 securities 1 Less: Redemption of Government 21,022.5 21,898.7 21,180.0 36,589.0 23,815.5 25,515.5 28,293.8 30,309.5 24,667.0 289,310.5 securities Conversion from accumulated 9,708.4 12,699.0 17,121.3 20,194.4 21,593.9 22,110.9 25,597.8 24,697.6 26,059.0 13,157.6 advance deposits 2) New advance deposits 16,222.3 13,526.1 15,164.2 18,402.4 19,280.2 18,284.3 18,545.5 20,246.2 20,683.0 6,088.8 3) Net issues of statutory boards’ 1,415.0 500.0 -1,271.0 1,740.0 17,595.0 18,380.0 39,040.0 34,896.0 -16,900.0 -4,020.0 securities2

B New capital raised by the private 22,650.2 9,839.0 24,452.8 12,673.4 16,887.8 6,019.8 13,767.1 11,298.6 7,307.6 390.9 sector 1) Public issues of shares 7,805.9 5,538.6 3,209.9 6,744.4 10,420.2 2,315.1 6,315.0 3,522.0 595.8 48.7 2) Rights issues 6,709.6 3,365.0 17,216.2 2,143.4 3,834.8 1,438.3 3,143.9 5,425.6 4,326.7 197.0 3) Private placements of listed 8,134.7 935.4 4,026.8 3,785.7 2,632.8 2,266.4 4,308.2 2,351.0 2,385.1 145.2 shares

C Issues of debt securities 29,986.7 15,494.3 15,320.5 25,880.7 24,800.7 32,780.8 25,499.5 26,025.3 26,675.9 4,522.7 1) Listed bonds, debentures and 17,940.2 8,804.0 6,816.6 17,793.0 15,797.0 26,708.0 18,427.7 19,072.0 15,008.0 3,086.0 loan stocks 3 2) Unlisted bonds 4 12,046.5 6,690.3 8,503.9 8,087.7 9,003.7 6,072.8 7,071.8 6,953.3 11,667.9 1,436.7

Total net funds raised (A+B+C) 75,474.2 42,859.4 56,566.5 62,296.5 82,763.7 78,664.9 100,252.1 96,566.1 45,565.0 11,270.0

1 Government securities excluding treasury bills. 2 Statutory board securities including MAS Bills. 3 Singapore dollar-denominated bonds listed on the Singapore Exchange (SGX). 4 This includes bonds that are not listed on the SGX but listed on other exchanges. H.1 ASIAN DOLLAR MARKET: ASSETS AND LIABILITIES

US$ Million March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Assets Loans to non-bank customers 197,823.1 214,381.9 219,614.4 268,081.7 312,814.0 340,914.0 400,597.0 433,648.4 407,968.8 400,512.0 Interbank funds 532,674.6 498,669.6 460,726.4 501,891.4 528,823.2 562,970.6 614,645.6 569,140.4 536,726.3 543,864.7 In Singapore 66,398.3 64,140.5 80,941.5 92,715.5 113,361.8 133,171.6 162,830.7 169,487.9 149,080.8 151,008.4 Inter-ACU 53,610.7 54,620.3 41,678.4 53,762.1 53,383.9 53,768.7 56,274.7 51,138.2 60,510.7 59,632.2 Outside Singapore 412,665.5 379,908.9 338,106.5 355,413.7 362,077.5 376,030.3 395,540.2 348,514.3 327,134.9 333,224.1 NCDs held 2,520.4 1,052.5 1,187.7 1,111.3 686.1 1,745.6 4,883.3 7,312.6 6,748.1 6,807.9 Other assets 173,972.9 198,635.4 187,871.2 200,215.0 177,209.6 187,634.3 160,577.7 180,530.4 204,379.4 214,930.8

Liabilities Deposits of non-bank customers 275,256.9 262,162.1 269,370.2 273,980.3 296,376.6 327,863.5 365,141.3 393,116.8 395,070.2 400,407.0 Interbank funds 540,688.3 523,690.5 502,232.6 584,218.2 599,568.3 628,109.0 648,170.8 615,078.7 574,762.8 573,166.0 In Singapore 50,438.6 62,600.9 87,208.3 79,206.4 77,629.4 75,466.9 60,529.3 62,608.9 63,393.3 57,937.9 Inter-ACU 53,670.1 54,848.7 41,778.1 53,812.3 53,603.0 53,934.8 56,261.1 51,721.6 60,595.7 60,200.1 Outside Singapore 436,579.6 406,240.9 373,246.2 451,199.5 468,335.9 498,707.3 531,380.3 500,748.2 450,773.8 455,027.9 NCDs issued 3,652.1 1,593.9 1,416.2 1,780.4 1,686.8 3,572.8 9,916.7 12,682.5 6,658.6 7,690.9 Other liabilities 87,393.7 125,292.9 96,380.6 111,320.5 121,901.2 133,719.3 157,474.7 169,753.8 179,331.0 184,851.4 Annual Report 2015/16

Total Assets/Liabilities 906,991.0 912,739.4 869,399.6 971,299.4 1,019,532.9 1,093,264.6 1,180,703.6 1,190,631.8 1,155,822.6 1,166,115.3 129 130 H.2 ASIAN DOLLAR MARKET: Monetary Authority ofSingapore MATURITY TRANSFORMATION BY ASIAN CURRENCY UNITS

US$ Billion March End of Period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Net Position 1 Up to 6 months -162.6 -169.1 -160.8 -178.5 -178.1 -154.3 -169.8 -179.3 -154.1 -159.0 Over 6 months to 1 year 27.0 21.7 15.6 28.7 33.3 20.4 28.1 25.8 16.1 17.6 Over 1 to 3 years 46.8 50.8 60.4 67.2 58.4 56.9 56.9 60.0 51.8 53.5 Over 3 years 83.9 83.4 73.0 79.6 75.3 67.8 76.3 79.5 70.5 76.2

Claims 1 Up to 6 months 603.3 570.3 561.6 621.9 642.1 701.1 764.4 758.7 734.9 741.8 Over 6 months to 1 year 55.3 52.4 42.6 54.4 68.0 65.2 78.2 75.0 74.0 80.2 Over 1 to 3 years 71.7 80.9 85.0 101.9 109.5 115.6 121.5 138.8 136.4 131.4 Over 3 years 117.7 117.4 105.8 122.4 126.8 129.9 135.7 142.8 134.0 140.0

Liabilities 1 Up to 6 months 765.9 739.4 722.4 800.4 820.2 855.4 934.2 938.0 889.0 900.8 Over 6 months to 1 year 28.3 30.7 27.0 25.7 34.7 44.8 50.1 49.2 57.9 62.6 Over 1 to 3 years 24.9 30.1 24.6 34.7 51.1 58.7 64.6 78.8 84.6 77.9 Over 3 years 33.8 34.0 32.8 42.8 51.5 62.1 59.4 63.3 63.5 63.8

1 Data exclude those claims or liabilities with unallocated maturity periods. Therefore the sum of all the maturity categories for claims may not be equal to the sum of all the maturity categories for liabilities.

GLOSSARY

112 Monetary Authority of Singapore Annual Report 2015/16 113 GLOSSARY

AML/CFT Anti-Money Laundering and Countering the Financing of Terrorism ASEAN Association of Southeast Asian Nations ASEAN-4 ASEAN (Indonesia, Malaysia, Thailand and the Philippines) ASEAN+3 ASEAN plus China, Japan and South Korea BOJ Bank of Japan CNY Chinese Yuan COE Certificate of Entitlement CPI Consumer Price Index ECB European Central Bank EUR Euro FinTech Financial Technology FSB Financial Stability Board FY Financial Year G20 Group of Twenty G3 Group of Three GBP British Pound GDP Gross Domestic Product IMF International Monetary Fund INR Indian Rupee IT Information Technology JPY Japanese Yen LIBOR London Interbank Offered Rate MOU Memorandum of Understanding NEA-3 Northeast Asia (Hong Kong, Taiwan and South Korea) PBC People’s Bank of China q-o-q Quarter-on-Quarter RMB Renminbi S$/SGD Singapore Dollar S$NEER Nominal Effective Exchange Rate SAAR Seasonally Adjusted Annualised Rate SGX Singapore Exchange SIBOR Singapore Interbank Offered Rate y-o-y Year-on-Year US$/USD United States Dollar

114 Monetary Authority of Singapore Annual Report 2015/16 115 Published by Monetary Authority of Singapore Designed and produced by: Oculus Design Pte Ltd

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