University of Cambridge

Basel III & Beyond:

A View from Asia Master of Finance Individual Project

Student Project

Supervisor: Professor Lord John Eatwell

August 2011

CONTENTS

Executive Summary

1

Introduction

6

Research Methodology

7

CHAPTER ONE China

8

CHAPTER TWO Hong Kong

20

CHAPTER THREE Singapore

32

CHAPTER FOUR The Beginnings of an Asian Monetary Fund

46

Concluding Remarks

54

Appendix: Innovation & Liberalisation – Views of the 3 jurisdictions

55

References

1

EXECUTIVE SUMMARY

As the Basel III reform package endorsed by the G20 has largely been formulated to address problems of the Global Financial Crisis of 2007–2010 which originated from the West, a legitimate question would be: how relevant is the reform package to the Far East? This report attempts to answer the question of how Asia views Basel III by focusing on the reactions of regulators, bankers and local commentators in China (Chapter 1), Hong Kong (Chapter 2) and Singapore (Chapter 3). Local measures taken by each jurisdiction beyond Basel III are also presented in the report. A literature survey of information published by national regulators and local commentaries covered in media reports from 2007 to date found that the 3 jurisdictions generally endorse Basel III, albeit certain proposals have sparked more concerns than others. CHINA (Chapter 1) Officials’ views In China, the broad concept of Basel III is supported. Regulators welcome Basel III as the higher regulatory standards in Basel III indirectly endorses the conservative regulatory approach the Chinese has always adopted. Basel III also comes at an opportune time as credit growth in China has accelerated and tighter measures would thus be appropriate. China also sees participating in global regulatory reforms as ways to ensure national interests are safeguarded and to fulfil their responsibility as a member of G20, the Financial Stability Board and Basel Committee on Banking Supervision. Local commentaries Chinese bankers have generally taken Basel III positively, being well-positioned to meet the higher standards and support countercyclical and leverage measures as innovative policies appropriate for the industry. Commentators also think that Basel III would enhance growth opportunities in Asia because Chinese banks are better placed than European and American banks in meeting Basel III capital requirements and therefore are less constrained to make new loans. Given the availability of funding from banks, businesses could be attracted to the region, thus fuelling further growth in Asia. Specific Basel III proposals The Chinese version of Basel III is largely aligned to the G20’s reform package, with some differences, including: (a) an earlier adoption of capital requirements (b) a higher Common Equity Tier 1 ratio of 5%, compared to Basel III’s 4.5% and (c) a higher leverage ratio of 4% compared to Basel III’s 3%. Countercyclical measures were deemed particularly appropriate by both regulators and local commentators given the dramatic growth in credit in China. China has also decided to impose an additional 1% capital charge on domestic systemically important banks albeit regulators opined that this in itself is insufficient. It believes that at the same time, banks should not be allowed to become too complex or too interconnected with capital markets.

2

Beyond Basel III Chinese officials have introduced several measures relating to the extension of loans. The Chinese Banking Regulatory Commission (CBRC) requires banks to set aside loan loss provisions amounting to 2.5% of total loans or 150% of non-performing loans, whichever is higher. While bankers believed that meeting the 2.5% requirement would be a challenge, others argued that 2.5% would still be insufficient to cover losses from potentially bad loans given out to local government backed projects. Regulators have also imposed dynamic loan-to-value (LTV) and debt-to-income ratios as well as minimum down payment requirements and several other property purchase restrictions to cool the rising property market. In addition, monetary policies have been tightened. The CBRC also encourages banks to focus on credit quality and tries to direct credit growth by favouring flows to the real economy over those to the stock and property markets. Commentators opined that this is a smart way to control credit without affecting growth in the real economy. Apart from controls over credit growth, the CBRC sees the integration of banking and capital markets as a risk and thus controls activities that link the 2 markets. HONG KONG (Chapter 2) Officials’ views Hong Kong regulators support the aim of Basel III and intend to implement the Basel III reform package. As an international financial centre, officials see it necessary to adopt international standards and contribute to the resilience of the wider banking industry. Although Hong Kong banks have escaped relatively unscathed from the Global Financial Crisis, senior regulators see the need to be concerned about Basel III because Basel III affects Western banking systems and Asia is not decoupled from the West. In addition, Hong Kong hopes for greater Asian representation in international forums. Encouragingly though, it sees positive trends of greater Asian participation and willingness of others to listen to experiences of the region. Local commentaries The business community has generally taken the reform package positively but is concerned about the cumulative impact of various changes. Specific Basel III proposals Although Hong Kong is generally supportive, concerns have been raised over a few proposals. On liquidity rules, from the officials’ viewpoint, liquidity requirements are new and so should be closely monitored for unintended consequences. One unintended consequence that regulators foresee is the effects on corporate debt markets. Corporate debt markets in Asia are not developed and with liquidity rules focusing on government debt, it would be even more difficult to develop corporate debt markets. Another unintended consequence is the stability of deposits. As banks compete for stable retail deposits by raising deposit rates, customers become less loyal and would shift deposits, making retail deposits less ‘sticky’. Bankers are also concerned because Hong Kong does not have sufficient local government bonds to meet the definition of high quality assets. Some also disagree with the focus on government bonds as it forces banks to hold more low yielding

3

assets. Others make the observation that jurisdictions with low government debt are perversely penalised for managing their fiscal positions well. On the proposal to promote the use of central counterparties, there are concerns that the volume of Asian-Pacific derivatives is too low to ensure the viability of Asian clearing houses. Beyond Basel III Significant measures beyond Basel III are LTV and debt servicing ratio. The Hong Kong Monetary Authority sees LTV as a cornerstone of its regulatory policies that has withstood political pressures and market innovation such as securitisation. Regulators are also considering ring-fencing liquidity by requiring foreign banks to be set up as subsidiaries rather than as branches. Banks are also mandated to maintain a certain amount of assets in Hong Kong through the deposit insurance scheme. Most global banks, however, do not welcome this as they manage liquidity centrally. SINGAPORE (Chapter 3) Officials’ views Singapore officials support Basel III but make it clear that rules should be adapted to local circumstances to be effective, particularly given that Asia and Singapore are different from the West in stages of economic growth, banking business models and regulatory approaches. This, however, does not mean that higher standards will not be aspired to. In fact, because Singapore is a small and open economy that operates in a developing region, it believes higher standards are all the more important. Officials also see imposing high prudential standards as a source of competitive advantage as it reinforces Singapore’s reputation as a safe financial centre. Local commentaries Analysts believe that as Singapore banks are better positioned to meet Basel III standards, they enjoy an advantage over foreign banks which would have to incur higher costs to meet the new standards. On the other hand, a top banker pointed out the shortfall in Basel III in addressing what he saw was the root cause of the crisis which was lax lending practices. Specific Basel III proposals The Monetary Authority of Singapore (MAS) requires Singapore banks to meet Basel III capital standards earlier and to exceed Basel III’s Common Equity requirements by 2% primarily because all the four locally incorporated banks are systemically important domestically. The business community responded positively to the higher standards, believing that it would strengthen Singapore’s position as a financial hub. Bankers in Singapore expressed similar concerns as those in Hong Kong with regard to liquidity requirements. Given the lack of Singapore government bonds, bankers opined that they would be forced to hold low yielding foreign currency bonds and be exposed to foreign currency risks. On the proposal for central counterparties, the Singapore Exchange became the first in Asia to offer a clearing service for Over-the-Counter (OTC) financial derivatives. Although there has been

4

significant interest from both global and local institutions in the service, there are still doubts as to whether trading volumes would be sufficient to ensure the viability of an Asian clearing house. Beyond Basel III Land-scarce Singapore similarly imposed LTV limits which officials see as a more targeted tool that controls credit without affecting the availability of credit to other sectors. The government also introduced prohibitive seller’s stamp duty on properties sold within 4 years of purchase to deter speculation. Before the Global Financial Crisis, Singapore has already imposed rules which require foreign banks to maintain at least a minimum amount of assets in Singapore. Bankers largely disagree with this pointing out the inefficiencies of such requirements for global banks and the higher funding costs that need to be incurred. Beyond regulations, the MAS believes in the need for effective supervision and corporate governance as complementary forces to ensure banking stability and has proposed enhancements to banks’ corporate governance frameworks. Through researching the 3 jurisdictions’ responses to Basel III, it becomes clear that there are differences between Asia and the West. Hence, a longer-term question would be whether Asia could eventually seek out its own solutions, for example, in the form of an Asian Monetary Fund (AMF). Chapter 4 of this report explores if there are indeed signs of an early beginning of an AMF. THE BEGINNINGS OF AN ASIAN MONETARY FUND (Chapter 4) The idea for an AMF was first conceived during the Asian Financial Crisis of 1997–1998 but was quickly rejected by the International Monetary Fund (IMF) and the US Treasury. However, Asia continues to be interested in the proposal. Asia today, with healthier economic fundamentals, is better positioned to pursue the idea. Bitter memories of harsh policies imposed by the IMF on Asian economies during the Asian Financial Crisis as well as the current underrepresentation of Asia in the IMF provide the impetus to create an AMF. The first concrete step Asia has taken in its journey towards an AMF is to establish the Chiang Mai Initiative (CMI) which consisted of bilateral swap agreements that could be triggered to help member countries overcome liquidity problems in times of crisis. Participating countries include the 10 members of the Association of South East Asian Nations (ASEAN), China, Japan and Korea (collectively, ASEAN+3). In 2010, this arrangement was further enhanced by multilateralising the bilateral swap agreements, an initiative known as the Chiang Mai Initiative Multilateralisation (CMIM) so that reserves could be drawn on with just one agreement. However, in practice, members chose not to tap on the CMIM pool during the Global Financial Crisis but instead separately negotiated for other forms of back-up arrangements with different countries. This is largely due to the requirement for members to enter stand-by arrangements with the IMF before CMIM funds could be utilised. The link to the IMF was deemed necessary as the CMIM lacked a surveillance function which the IMF performs to guard against moral hazard. But such a requirement also meant that the CMIM would be an unpopular alternative of aid in times of stress.

5

In 2011, steps to address this gap in the CMIM were made by establishing the ASEAN+3 Macroeconomic Research Office (AMRO) which would perform surveillance and due diligence. Commentators viewed the establishment of AMRO very positively, likening it to the beginning of an AMF. Beyond CMI, CMIM and AMRO, there are other positive developments. Asia’s monetary policies are converging although not through deliberate coordination. Intra-regional trade is also high and is expected to increase even further. However, Asian savings are still largely invested outside the region. To facilitate intra-regional investments, there needs to be more progress on financial integration. Since the Asian Financial Crisis, progress has been made and the possibility of an AMF now seems more likely. However, time is needed for the new AMRO to build up competencies and for greater financial integration to take place before an AMF-like institution may truly be established.

6

INTRODUCTION

Background & Motivation of Study

The key regulatory response to the Global Financial Crisis of 2007–2010 has been the G20’s endorsement of the Basel III reform package developed by the Basel Committee on Banking Supervision. Since the reform package was to address problems of the crisis, which originated and significantly afflicted the West, how relevant is this to the Far East? There are good reasons to think that Asia may not regard Basel III as relevant. For one, Asia is different from the West. While problems in the West relates to leverage and regulatory flaws, Asia’s problems arise from “its dependence on exports and exposure to the volatility of international financial flows”1. Asia does not suffer from the same problems as the West as it began de-leveraging and tightening banking regulations after the Asian Financial Crisis of 1997- 19982. Asian banking products are also less complex and less risky3. For another, Asia, including both the more developed economies such as Australia, Korea, Hong Kong and Singapore and the emerging economies such as India and China, continues to be under-represented in international decision-making4. In part, the lack of influence is due to the fact that there is no unified Asian position in the G20, leading the US and Europe to become natural drivers in global efforts to reform financial regulations5. Further, to Asia, the very nations which have led the discussions might have lost moral high grounds to impose new measures. Howard Davies, former Chairman of UK’s Financial Services Authority, wrote in an article for Caijing Magazine, the most widely read finance journal in China, that: “…recent criticism of Asian regulators by US Treasury Secretary Timothy Geithner is viewed across the region with scorn, not to mention incredulity. A little more humility is in order, given US regulators’ performance in the run-up to the crisis. People who live in glass houses should not throw even rhetorical stones.”6 Overview of Report Given the possible different viewpoints of the West and the East, this report seeks to find how regulators and local commentators in Asia have responded to the G20 reform package by focusing on the responses of 3 jurisdictions - China, Hong Kong and Singapore (Chapters 1 to 3). Views of regulatory authorities and business communities as well as additional measures taken by each jurisdiction beyond Basel III are included in each chapter. From the analysis, it becomes evident that there are different circumstances in Asia which may render certain proposals less appropriate. Hence, the broader and more general question of whether Asia may eventually seek solutions of its own, for example in the form of an Asian Monetary Fund (AMF), emerges. Chapter 4 investigates if there are signs of early developments of an AMF. In the course of reviewing the responses of the 3 jurisdictions, it also becomes apparent that the 3 adopt slightly different approaches to innovation, regulation and liberalisation. The Appendix at the end of the report attempts to present the approaches adopted by the 3 jurisdictions.

7

RESEARCH METHODOLOGY

Research for this report was primarily performed using online secondary sources. The views of local regulators were collated from official government websites. Focus was given to press releases, speeches and circulars issued from 2007 onwards to coincide with the timing of the Global Financial Crisis. As Basel III relates to prudential measures, discussions relating to market conduct issues were excluded from the scope of this report. To obtain the views of the local banking community and other commentators, well-regarded and widely-read local and regional publications (see table below) were referred to, in addition to searches on Factiva, a commercial news database, and on the internet.

China Hong Kong Singapore Others

China-based

Caijing Magazine

21st Century Business Herald

Shanghai Securities News

China Securities Journal

China Daily Hong Kong-based (but covers China)

Hong Kong Economic Journal

South China Morning Post

The Wall Street Journal Asia

Caixin Online

Hong Kong Economic Journal

South China Morning Post

The Wall Street Journal Asia

Caixin Online

China Daily (Hong Kong Edition)

Straits Times

Business Times Singapore

AsiaRisk magazine Risk magazine

8

CHAPTER 1: CHINA

This chapter presents China’s response to Basel III. The first section of this chapter summarises China’s general reaction towards Basel III while the second section presents the Chinese’s responses to specific Basel III recommendations. The third section highlights additional measures taken by China beyond Basel III. Within each section, the official regulatory response and local business commentary are presented. SECTION 1: CHINA’S GENERAL RESPONSE TOWARDS BASEL III

THE OFFICIAL RESPONSE Supports Basel III Chinese officials recognise the merits of Basel III in addressing the flaws in the financial system and see Basel III as a means to improve the ability of the banking sector to handle external stress, ensure long-term robustness and reduce systematic risks1. Simon Topping, head of KPMG’s Financial Services Regulatory Centre of Excellence in Asia Pacific and former senior regulator at the Hong Kong Monetary Authority, believes that the Chinese regulators support Basel III because Basel III furthers the regulators’ aim for Chinese banks to strengthen “capital, liquidity, risk management and governance” 2 and provides indirect endorsement of the stricter regulatory stance the Chinese has always been adopting3. Elaine Wong, managing director and head of Professional Services Asia-Pacific at Moody’s Analytics further added that the China Banking Regulatory Commission (CBRC) uses Basel III (and Basel II) to remind banks of various risks4. In addition, Basel III comes at an opportune time as the imposition of tighter rules is especially appropriate given the dramatic credit growth in China in recent years5. Notwithstanding the officials’ acceptance of Basel III, the Chinese believe in the need to customise rules to suit local circumstances. To safeguard national interests and fulfil role as member of the international community The Chinese also sees participating in global regulatory reforms as ways to “actively safeguard the core interests of China’s banking industry”6. For instance, in the earlier drafts of Basel III proposals, CBRC Chairman Liu Mingkang had provided feedback that the draft proposals “mainly take into consideration the banking practices in the European and US economies” without adequately taking into account “the actual situation of emerging market economies”7. As a result, the oversight body of the Basel Committee was said to have made amendments to various proposals8. In general, however, as a new member of the Financial Stability Board (FSB) and Basel Committee on Banking Supervision (BCBS), China has kept a relatively low profile during the Basel III negotiations9. This could be because key subject matters which dominated discussions such as capital rules and

9

complex financial products were less of an issue for Chinese banks as they are well-capitalised and avoided complex financial products10. In addition, China also believes that it should adopt Basel III to fulfil its duties as a member of the G20, the FSB and BCBS11. THE BUSINESS COMMMUNITY RESPONSE The business community similarly saw merits in Basel III. A survey conducted between April and June 2010 which involved 44 Chinese banks found that Chinese bankers believe that innovative measures such as countercyclical capital buffers and leverage ratio are good models for the Chinese banking industry12. Other local commentators believe that “Basel III will provide China financial system with new [commercial] strength” 13. As Chinese banks are better capitalised than European and American banks, they face less constraints in growing their loan books, and thus would be better able to meet businesses’ financing needs. The combination of a strong banking sector and large liquid stock markets viz. Hong Kong, Shanghai and Shenzhen means there would be easier access to funding and this could incentivise multinational corporations to set up businesses in Asia, thereby fuelling further growth in the region14. Commentators also see practical value in Chinese banks adopting Basel III. Since Basel III is a global standard, adopting and meeting Basel III standards would help Chinese banks establish the credibility to expand internationally15. However, commentators agree with CRBC’s stand on the need to customise rules to cater to local circumstances. Dai Peng, an official with Export-import Bank of China, one of China’s policy banks pointed out that while Western markets were under-regulated and thus stricter regulations ought to be imposed, emerging markets are different as “economic development” should be the priority16. Fan Gang, former advisor to the People’s Bank of China (PBOC), China’s central bank, highlighted that another difference is that emerging markets are “more vulnerable to external risks” and “less capable of self-adjusting”, and hence policies need to be adapted to take care of such vulnerabilities17. SECTION 2: CHINA’S RESPONSES TO SPECIFIC BASEL III RECOMMENDATIONS

1. BASEL III CAPITAL REQUIREMENTS Basel III’s increased minimum capital requirements and transitional arrangements are as follows18:

Minimum Capital Requirements Common Equity Tier 1 Tier 1 Capital Total Capital

Minimum under Basel III

4.5% (2.0%)

6.0% (4.0%)

8.0% (8.0%)

Conservation buffer 2.5% (0.0%)

Minimum plus conservation buffer

7.0% (2.0%)

8.5% (4.0%)

10.5% (8.0%)

(Basel II requirements are shown in brackets for comparison)

10

Transitional Arrangements

Beginning 2013

Beginning 2014

Beginning 2015

Beginning 2016

Beginning 2017

Beginning 2018

Beginning 2019

Minimum Common Equity Capital Ratio

3.5% 4.0% 4.5% 4.5% 4.5% 4.5% 4.5%

Minimum Tier 1 Capital

4.5% 5.5% 6.0% 6.0% 6.0% 6.0% 6.0%

Conservation Buffer

0.625% 1.25% 1.875% 2.5%

CHINA’S OFFICIAL RESPONSE TO BASEL III CAPITAL REQUIREMENTS Stricter capital requirements than Basel III China has long held that capital requirements are important19. Thus, its support for Basel III capital requirements is not surprising. The Chinese version of Basel III capital rules is largely in line with the G20’s endorsement except for the minimum requirement on Common Equity Tier 1 Capital Adequacy Ratio (CAR) which the CBRC has set at 5% i.e. 0.5% higher than that prescribed in Basel III20. The stricter Common Equity Tier 1 CAR is justified on grounds that Chinese banks have already met Basel III’s minimum requirement of 4.5% and the downside of setting a higher minimum is limited as a ratio of 5% is not expected to generate significant negative impact on domestic banks21. Higher capital requirements is also seen by officials as part of the solution to the problem of rapid credit expansion, which the central government has set out to address in China’s 12th-Five-Year Plan22. Earlier adoption While Basel III requires the implementation of new capital regulatory standards to begin in 2013 and for standards to be met by the end of 2018, Chinese officials require banks to start implementation from the beginning of 2012 and to meet the standards by the end of 2016 i.e. 1 year ahead of the implementation schedule and 2 years ahead of the compliance schedule23. Systemically important banks are required to meet the standards even earlier by end 201324. Chinese regulators do not see the need for as long a transition timeframe because Chinese banks are in better positions (as of June 2011, the weighted average CAR and core CAR of Chinese banks stood at 12.2% and 9.92% respectively25) than the European and American banks which face significant capital shortage and more uncertain economic growth prospects26. Further, the Chinese believe that market forces will motivate international banks to reach the new standards before the end-2018 deadline and earlier adoption by Chinese banks will improve domestic banks’ credit ratings and reputation, paving the way for China’s “go global” banking strategy27.

11

CHINA’S BUSINESS COMMUNITY RESPONSE TO BASEL III AND CBRC CAPITAL REQUIREMENTS The supporters Supporters such as China Merchants Bank’s President believe that higher capital requirements would motivate domestic banks to transform, improve economic capital management and constrain the build-up of risky assets28. The sceptics Sceptics however point out that while higher capital requirements seem appropriate given the current macro-economic situation in China, it is uncertain whether in the longer term, higher capital requirements would indeed increase stability for the whole banking sector29. Business impact analysis Business consultants are confident that big Chinese banks can meet Basel III CAR requirements and point out that there are business opportunities for banks which do not need to raise additional capital to meet the higher standards30. As Chinese banks do not face the same constraints in loan growth as European and American banks which lack capital and stable funding sources, they could win a greater share of the global funding market for capital intensive projects31. But the less optimistic consultants opined that Chinese banks lack international experience, are still focused on the domestic market and are therefore not prepared to take advantage of global opportunities32. Instead, they foresee that Chinese banks would “develop more diversified businesses, adjust their business model and reduce reliance on extending loans” which attract heavy capital charges33. The picture for smaller Chinese banks though is likely to be different. They are more likely to have to raise capital as they tend to be more aggressive in extending loans which require more capital backing34. Indeed, a number of banks which wish to continue with their business expansion plans in the face of higher capital requirements and tightened monetary conditions (Section 3, subsection 3 below provides details of the tightened monetary policies) have announced intentions to raise additional capital35. 2. BASEL III COUNTER-CYCLICAL CAPITAL BUFFER Under Basel III, an additional counter-cyclical buffer of up to 2.5% of Common Equity Tier 1 could be imposed in periods of rapid credit growth and released in downturns36. CHINA’S OFFICIAL RESPONSE TO COUNTERCYCLICAL CAPITAL BUFFER In line with G20’s endorsement, the CBRC requires commercial banks to set aside up to 2.5% as countercyclical capital buffer37. Chinese officials view the impositions of counter-cyclical measures during periods of market irrationality as more important than the stop-gap regulatory reforms which typically follow each crisis38. They believe that without countercyclical regulatory intervention, market failures will be more frequent39. CHINA’S BUSINESS COMMUNITY RESPONSE TO COUNTERCYCLICAL CAPITAL BUFFER Bankers surveyed in the Chinese Bankers Survey Report for 2010 welcomed the countercyclical capital buffer as an innovative and good regulatory policy for the industry40.

12

Citing China’s credit-to-GDP ratio, analysts gave their support for high countercyclical capital buffers. Credit Suisse analysts Jain and Wu pointed out that China’s credit-to-GDP ratio increased from 120% to 166% between end 2008 and March 201141. In comparison, guidance published by the Basel Committee in December 2010 suggested imposing the maximum buffer when credit-to-GDP ratio exceeds long-term trend by 10%42. 3. BASEL III ADDITIONAL CAPITAL CHARGES FOR SYSTEMICALLY IMPORTANT FINANCIAL

INSTITUTIONS (SIFIs) Recent proposals recommend imposing capital surcharges ranging from 1% to 2.5% on global SIFIs43. CHINA’S OFFICIAL RESPONSE TO CAPITAL CHARGES FOR SIFI Prior to Basel and FSB’s recent recommendation on the size of capital charges for global SIFIs, the CBRC has temporarily set the additional capital requirement for domestic SIFIs at 1%44. In total, this means that systemically important banks (SIB) need to maintain minimum CAR of 11.5% by end of 2013. Although Chinese regulators have endorsed Basel III, the Chinese believes that existing regulatory responses such as capital charges, proprietary trading restrictions and “living will” for interconnected SIFIs are insufficient. In CBRC Chairman Liu’s words, “prevention is, as a rule, better than cure”45. For the Chinese, prevention takes the form of a firewall between banking and capital market activities to minimise interactions and contagion risks46 (Section 3, subsection 6 below provides details of the “firewall” policy). The CBRC believes that banks should not become too complex to manage or supervise47. CBRC Chairman Liu opined that some US institutions have failed because they had offered too many products which made it difficult to monitor and control risks effectively48. His preference is thus for Chinese banks to focus on niche areas and deliver targeted products to customers49. Hence, CBRC manages banks’ expansions to new activities carefully. For instance, while commercial banks could pilot the integration of traditional banking and non-banking activities, the banks have to ensure that their non-bank subsidiaries make and implement specific exit plans if they fail to meet targets within specified timeframes50. CHINA’S BUSINESS COMMUNITY RESPONSE TO ADDITIONAL CAPITAL CHARGES FOR SIB Moody’s regards China’s capital requirements on SIB to be “credit positive” for the banking system as higher capital provides better protection for debt-holders and depositors51. However, Wu Xiaoling, former deputy governor of People’s Bank of China and current director of China Europe International Business School Lujiazui International Finance Research Centre 52 , cautioned that although SIB currently do not face capital shortages, in five years’ time there could be a shortfall in capital of between 400 billion yuan and 500 billion yuan if banks’ lending continue to increase 53. Indeed, some banks, including those that are expected to be classified as SIB54, have announced plans to raise additional capital55.

13

4. BASEL III LEVERAGE RATIO Under Basel III, a non-risk-weighted minimum leverage ratio (defined as the ratio of Tier 1 capital to total exposures, including on- and off-balance sheet items) of 3% is being tested for planned migration to Pillar 1 in 201856. CHINA’S OFFICIAL RESPONSE TO LEVERAGE RATIO Stricter leverage ratio requirement CBRC stipulates that tier-one capital must be at least 4% of total on- and off-balance sheet assets57. This is higher than the minimum 3% requirement in Basel III. Chinese banks are also required to meet the leverage ratio requirement earlier58. The Chinese observed that although the capital adequacy ratio of major western banks was relatively high prior to the crisis, their levels of leverage continued to increase, indicating that risk-weighted capital adequacy ratio alone was not able to effectively control the level of leverage59. The CBRC further noted that some Western banks had used complicated models to “disguise” the true level of capital adequacy60. Lehman Brothers, for instance, was about 30 times leveraged61. The CBRC also noted that increased levels of leverage made the financial system more vulnerable62. The Chinese officials thus believe that a leverage ratio should be imposed to prevent financial institutions from excessively expanding their balance sheets to curb irrational growth and build-up of systematic risks and to offset potential weaknesses in banks’ internal risk management63. Regulators believe that a higher minimum leverage ratio ought to be imposed because the majority of the banking institutions in China have already reached 4% leverage ratio and a ratio that is set too low will not effectively constrain banks’ rapid expansions64. CHINA’S BUSINESS COMMUNITY RESPONSE TO BASEL III LEVERAGE RATIO The Chinese Bankers Survey Report for 2010 which gathered 752 valid questionnaires responses and 70 face-to-face interviews with senior banking executives from a variety of banking sectors (large-size commercial banks, joint-stock commercial banks, city commercial banks, rural credit cooperatives and policy banks) found that bankers support the leverage ratio as a good regulatory standard for the Chinese banking industry65. Guo Tianyong, an economist and director of the Research Centre of the Chinese Banking Industry at the University of Finance and Economics, however, pointed out that leverage restrictions would be less effective in China as Chinese banks do not use financial derivatives as extensively as their Western counterparts66. Nonetheless, this restriction should prove useful in the longer term67. 5. BASEL III LIQUIDTY RATIOS Under Basel III, two liquidity standards would be introduced68: (a) Banks would need to maintain a Liquidity Coverage Ratio (LCR) of at least 100% to ensure

that they hold sufficient high quality assets to cover net cash outflows for 30 days in a severe stress scenario.

14

Eligible assets are categorised into ‘level 1’, comprising mainly domestic sovereign bonds and ‘level 2’ which can include non-financial corporate bonds and covered bonds not issued by banks69. Haircuts are applied to level 2 assets and such assets cannot make up more than 40% of the overall stock after haircuts have been applied70.

(b) Banks would also need to maintain a Net Stable Funding Ratio (NSFR) of at least 100% to

ensure that stable funding is available to cover funding requirements over a one year period of extended stress.

CHINA’S OFFICIAL RESPONSE TO LIQUIDITY RATIOS Prior to the G20 endorsement, the CBRC provided feedback that the original draft liquidity proposals were not sufficiently prudent: for instance, it believed that highly rated corporate bonds and covered bonds should not qualify as high quality liquid assets71. In the revised version of the Basel III liquidity proposals, such assets were then classified under ‘level 2’72. CBRC endorses the revised proposals and requires banks to meet Basel III liquidity ratios73. It believes that the liquidity requirements would encourage China’s commercial banks to increase holdings of high quality liquid assets, reduce maturity mismatch and increase long-term stable funding sources74. Based on CBRC’s quantitative impact studies, the majority of domestic banks have already reached or would soon reach the regulatory requirements on liquidity75. Additional requirements for liquidity In addition to the two Basel III liquidity ratios, Chinese banks are required to meet other regulatory liquidity indicators such as deposit-to-loan ratio, liquidity gap ratio and financing concentration76 and to monitor the liquidity of deposits daily and loans monthly77. CBRC believes that this will motivate banks to establish a system of liquidity risk controls that incorporates multiple scenarios, currencies and time-frames78. The CBRC has also issued guidelines on liquidity risk management. Amongst many others, CBRC’s recommendations encourage banks to79 Appoint dedicated personnel for liquidity risk management; Incorporate liquidity risk management into banks’ internal audit processes; Perform stress tests covering scenarios such as erosion in the value of liquid assets and

significant loss in retail deposits; Formulate emergency plans and Develop a list of early warning indicators of liquidity risks e.g. rapid assets growth, increase in

counterparties’ requests for additional collateral for credit exposure, refusals by counterparties to carry out new transactions, etc.

15

SECTION 3: ADDITIONAL MEASURES IMPOSED/ PROPOSED BY CHINA BEYOND BASEL III

1. LOAN LOSS PROVISIONING CBRC requires banks to set aside provisions of at least (a) 2.5% of total outstanding loans (“loan loss provision ratio”) and (b) 150% of total non-performing loans (“provisioning coverage ratio”), whichever is higher80. As the loan loss provision ratio is linked to loan size rather than asset quality, it is more sensitive to credit expansion and thus acts as a countercyclical balance which accumulates reserves during credit expansion and which could be used to cover losses during economic downturns, hence compensating for the underestimation and overestimation of loan losses over the credit cycle81. RESPONSE TO LOAN LOSS PROVISIONING Evaluation of effectiveness The media notes that 2.5% is a high requirement going by international standards and should bolster investors’ confidence in mainland banks82. Market analysts by and large gave support to the new rules and CBRC’s model of “prudent banking supervision” 83. Bankers could also understand why regulators would want to build up precautionary reserves to cover non-performing loans given the high rate of loan growth in recent years84. However, citing statistics from a study done by CBRC, a South China Morning Post journalist opined that the new standards would still be insufficient against future loan losses. In a CBRC investigation on bank lending to local government-backed investment projects, the CBRC estimates that only 27% of loans could be serviced by cash flows from the projects and that as much as 23% of loans (1.7 trillion yuan) were highly likely to turn bad while a further 50% would likely require additional support from the local governments85. As the local government guarantees are implicit (and not explicit) and local governments could choose not to extend support, there is a risk that as much as 5.62 trillion yuan in bank loans could default86. Using typical recovery rates of 20%, this means that losses could amount to 9% of banks’ entire loan books87. In comparison, the 2.5% loan loss provision would thus be inadequate88. If the estimated losses truly materialised, profits for the entire banking industry would not only be completely erased, CAR would also be forced down to single digits89. To compound the problem, up to 40% of local government debts are due to mature in 2011 and 2012 and bank loans take up 79% of total local government debts90, which means that repayment risks, if any, are imminent. To further address default risks arising from local government backed loans, the CBRC has instructed banks not to extend loans to local governments for “unapproved projects” and is working with local governments to keep their debt at manageable levels91. In a move supported by local economists, the Ministry of Finance has also advised local governments to sell realisable assets to help pay off debts92.

16

Impact on banks While bankers generally do not think meeting the 150% minimum provision coverage ratio is a problem (industry’s provisioning coverage ratio stood at 155% as of end 200993), they see the 2.5% loan loss provision ratio as a challenge94. Bankers also expect the new provision policies to negatively affect profitability95. Economists further predict that such pressures would continue in the longer-term96. Faced with more intense regulatory constraints, a senior bank executive opined that banks would have to accelerate their transformation to maintain profitability growth97. 2. MORTGAGE LOAN & PROPERTY MARKET RESTRICTIONS China imposes dynamic loan-to-value (LTV) and debt-to-income (DTI) ratios on home mortgage lending98 and requires minimum down payments of 40% for second home mortgage loans to discourage speculation in the property market99. In addition, further restrictive measures could be imposed in selected cities. Examples include: (a) the imposition of property taxes100; (b) disallowing ownership of more than 2 houses per family in one’s hometown101; and (c) disallowing ownership of more than 1 house if the city is not one’s hometown102. Most recently in August 2011, the government introduced a pilot scheme for land auctions whereby the cost of the land is fixed and the developer who promises the lowest selling price for homes developed on the site would be awarded the auction103. RESPONSE TO MORTGAGE LOAN & PROPERTY MARKET RESTRICTIONS A senior government researcher sees China's attempts to cool soaring property prices as measures to control inflation and “ease social discontent over widening wealth disparity”104. There are signs that the policies are beginning to work. Property developers have reported an increase in inventory in the first half of 2011105. Property prices in cities such as Beijing, Shanghai, Guangzhou and Shenzhen where additional restrictions are imposed have increased at a slower rate than those where restrictions are not imposed106. In June 2011, 26 cities out of 70 major cities even reported declining or stagnating prices which is an improvement over May 2011’s 20 cities107. There are, however, implementation challenges on the ground. Individuals who still wish to buy additional properties are advised by property agents not to take mortgage loans and to pay “extra fees” to local officials to circumvent the rules. Analysts also expect some couples to file for divorces so that up to 4 houses (instead of 2) could be purchased108. The government is aware that local implementation may be lacking and sends investigation teams to provinces and cities to assess the real situation109. Others point out that property purchase restrictions are but short-term measures; to address the longer term issues, the government should commission more affordable housing projects to meet growing demand110.

17

3. TIGHTENED MONETARY POLICIES To discourage excessive bank lending, the central bank frequently raises the reserve requirement ratio (e.g. the ratio has been raised at least 6 times in 2011 and the 12th time since January 2010111) and the benchmark interest rate112. The PBOC is also considering implementing differentiated reserve requirement ratios for different banks113. RESPONSE TO TIGHTENED MONETARY POLICIES Commentators observe that loose monetary policy in the past has led to over-enthusiastic lending114 and agree that the reserve ratio is one of the most effective ways to discourage excessive lending115. Indeed, tightened monetary policies have led some banks to increase minimum down payment for property purchases and raise mortgage interest rates, suggesting that tightened monetary policies have been effective, at least in some sectors, in discouraging excessive lending116. However, the reduction in the availability of loans and increase in borrowing costs have caused difficulties for Small-and-Medium- size Enterprises (SME)117. Some businesses in Xijiang, for instance, have put expansion plans on hold or closed down production lines 118 . The Wenzhou SME Development Association even warned that as much as 40% of SMEs in China would have to cease operations if access to bank loans continues to be limited119. On the other hand, effectiveness of the policy is marred by implementation loopholes. Banks have tried to circumvent the tighter monetary conditions by engaging companies to source and channel large deposits to the banks on the last day of each month to temporarily boost their deposits base and meet the required reserve requirements for reporting to the central bank120. 4. ADDITIONAL MEASURES TO CONTROL AND DIRECT CREDIT GROWTH In addition to the above, China has introduced other measures to discourage unnecessary credit growth and to direct credit growth to the real economy. Examples include: (a) Forbidding blanket loan agreements for unspecified projects121 (b) Encouraging banks to focus on loan quality over quantity. Directives specify that attention

ought to be paid to documentation122, due diligence, large exposure limit and accurate loan classification123. Directives cover a wide spectrum of loan types. For instance, the frequently-dubbed "Three Measures and One Guideline" cover loans for fixed assets, project financing, liquidity loans and personal loans124. The directives also provide very detailed guidance. For example, in the Provisional Rules on the Management of Fixed Asset Loans, lending procedures including preliminary reviews of loan applications, risk evaluation, loan approvals and loan disbursements are extensively described125.

18

(c) Encouraging banks to extend loans to the real economy rather than to the property and stock markets, which are susceptible to asset bubbles126. For instance, to ensure that loans are used for the declared purpose, lenders are asked to disburse funds directly to the end supplier declared by the borrower, instead of to the borrower127. This addresses the phenomenon described by a banking insider whereby Chinese enterprises previously borrow more than is needed for business operations and channel the excesses to speculation128.

RESPONSE TO ADDITIONAL MEASURES TO CONTROL AND DIRECT CREDIT GROWTH As the directives focus on loan quality rather than impose explicit quantity restrictions, analysts opined that this is a clever way to manage credit growth while still enabling credit to flow to the real economy129. Different commentators have viewed the new directives positively: Yu Xiaoyi, analyst with Guangfa Securities, sees the directives as enabling banks to engage in

sustainable expansion130. Guo Tianyong, a professor with the Central University of Finance and Economics, opined that

the new directives will prevent systemic risk associated with rapid credit expansion131. Jing Ulrich, Chairman of China Equities and Commodities at JP Morgan Chase, expects banks

to continue to lend to support real economic activity, but be more vigilant especially in short-term lending and heed the regulators’ advice on guarding against asset bubbles132.

5. CONCENTRATION LIMITS Chinese officials view concentrated loan portfolios as a possible source of systemic risk as they believe banks with concentrated loan portfolios are more sensitive to fluctuations in macro-economic variables133. To manage concentration risks, CBRC requires banks to extend loans through syndication if the exposure to any single company or project exceeds 10% of capital or if the exposure to a conglomerate exceeds 15% of capital134. Banks are also reminded to aggregate bonds, loans, guarantees and credit commitments when measuring credit concentration risk exposure to corporate borrowers135. 6. SEPARATE BANKING AND CAPITAL MARKETS The CBRC believes that when banking and capital market operations are allowed to interact, financial institutions become more complex and regulatory limits lose some of their effectiveness136. As the boundary between banking and capital markets becomes blurred, contagion risk across markets is also exacerbated137. The recent crisis in which securitization created the linkage between banking and capital markets and distorted the incentives of loan originators, further convinced CBRC of the need to segregate banking and capital markets, a policy it terms as the “firewall” between credit and capital markets. It believes that a firewall is particularly well-suited given the early stages of financial market development in China138. To erect the firewall, the CBRC restricts banks from offering guarantees for bond issuance and checks for illegal flows of credit funds into the stock market139. There is also a clear prohibition of

19

complicated securitisation and re-securitisation140. Securitisation of non-performing assets and assets with less predictable cash flows are also strictly controlled141. 7. INTERNATIONAL BANK RESOLUTION PROCESS Beyond domestic regulation, CBRC Chairman Liu has a suggestion for cross-border bank resolutions142. As it is difficult to harmonize legal frameworks across countries, he suggests that an international treaty establishing rules on depositor protection and information sharing across countries should be established to ensure that stakeholders across jurisdictions are fairly and equally treated. 143 This would provide clarity on the resolution process and limit opportunities for national authorities to take unilateral actions144, which may be to the disadvantage of foreign counterparties145. The CBRC has already begun work on its suggestion. In July 2011, the CBRC signed an agreement with the Monetary Authority of Singapore (MAS) where the 2 countries agree to “strengthen cooperation and information-sharing on cross-border crisis management and resolution issues”146. RESPONSE TO SUGGESTION ON INTERNATIONAL BANK RESOLUTION The Wall Street Journal Asia notes that such public suggestions from China on the global financial framework are rare147. While the impact of such a proposed treaty on Chinese banks is expected to be minimal in the near future as Chinese banks are as yet not major global players, this is likely to change in the longer term when Chinese banks ‘go global’ and as the Chinese yuan becomes more widely used148. SECTION 4: CHINA’S RESPONSE: SUMMARY & CONCLUSION

In summary, China supports the broad concept of Basel III. Officials welcome the tighter regulation in Basel III as it indirectly endorses the Chinese’s traditionally conservative regulatory approach and furthers their plans to strengthen the domestic banking system. Basel III also comes at an appropriate time as tougher regulations would counter the current high credit growth rates in China. Notwithstanding the Chinese’s endorsement of Basel III, officials are open to customise domestic rules where they deem appropriate. In areas where they have done so, rules tended to be more stringent, because Chinese banks have already largely met Basel III requirements and are in the position to withstand stricter rules. The local business community has generally taken Basel III positively, being well-positioned to meet the higher standards, and support countercyclical and leverage measures as good and innovative measures for the industry. Beyond Basel III, officials have introduced several measures relating to the extension of loans to manage credit risk and credit growth. The CBRC also believes that banking and capital markets should be separated by a “firewall” to limit contagion risks.

20

CHAPTER 2: HONG KONG

This chapter focuses on Hong Kong’s responses. The first section summarises Hong Kong’s general reaction towards Basel III while the second section focuses on its responses to specific Basel III recommendations. The third section highlights additional measures taken by Hong Kong beyond Basel III. Within each section, views of regulators and business commentators are presented. SECTION 1: HONG KONG’S RESPONSE TOWARDS BASEL III AS A WHOLE

THE OFFICIAL RESPONSE Support for Basel III The Hong Kong Monetary Authority (HKMA) states publicly that it is supportive of the underlying objective of Basel III to strengthen the resilience of the banking sector against cyclical economic shocks and intends to fully implement Basel III in Hong Kong1. Officials from HKMA dispelled the misconception that Basel III is not relevant for Hong Kong simply because Hong Kong banks have escaped relatively unscathed from the Global Financial Crisis. While Basel III has indeed been designed to address faults in failed banking systems in the West, it would be a mistake to ignore Basel III because Hong Kong as an international financial centre must adopt international standards2 and contribute to the resilience of the global financial system3. Hong Kong also needs to be concerned because Asia is not “decoupled from the developed world”

and if Basel III significantly affects Western banks, Asia would also be impacted 4. Furthermore, Asia’s speedy recovery should not be construed to mean that its banking system is sufficiently robust. The region’s quick recovery is also very much due to the underlying growth momentum of the economies5 and the fact that the region’s debt products are not as complicated as those of the developed world6. Notwithstanding Hong Kong’s official support for Basel III, the HKMA makes it clear that endorsing Basel III does not mean that measures would be adopted wholesale and inflexibly7. Desire for Increase in Asian Representation Speeches by HKMA officials acknowledge that Asia currently does not have a strong presence in international forums8, which are currently dominated by countries “in the deepest trouble” 9. Nevertheless, Asia still has a “responsibility to speak up” to ensure that decisions made take into account Asia’s circumstances10. Asia needs to continue to participate not only because of its growing economic influence but also because developing economies tend to suffer the most in economic crises11. On a positive note, HKMA observes that Asia has gained greater participation in international forums which signals that “the world is paying attention to, and ready to learn from, the experiences of this region”12.

21

THE BUSINESS COMMMUNITY RESPONSE Positive … The general consensus amongst bankers in Hong Kong is that Basel III “will make banks more stable in the face of financial turbulence”13. …. but with notes of caution However, Asian bankers including those from Hong Kong also state that they would like regulators to be conscious of “the cumulative impact of different measures”14. SECTION 2: HONG KONG’S RESPONSES TOWARDS SPECIFIC BASEL III RECOMMENDATIONS

1. BASEL III CAPITAL REQUIREMENTS Basel III has increased minimum Common Equity Tier 1 from 2% to 4.5% and minimum Tier 1 Capital from 4% to 6% but held minimum Total Capital constant at 8%15. An additional conservation buffer of 2.5% which banks could draw on in stress times would also be imposed16. The definition of what qualifies as capital has also been tightened17. With transitional arrangements, the new rules would

be fully implemented by beginning 201918. HONG KONG’S OFFICIAL RESPONSE TO BASEL III CAPITAL REQUIREMENTS Karen Kemp, HKMA’s executive director for banking policy, believes that the crisis has clearly highlighted that pre-crisis capital levels were too low19. Hence, higher capital requirements would be a step in the right direction. The HKMA thus intends to implement the higher minimum capital requirements in accordance with the Basel Committee on Banking Supervision (BCBS) transitional timetable20. Officials foresee no problems in local banks meeting the new regulatory standards as many Hong Kong banks have already exceeded Basel III minimum capital requirements21 (as of March 2011, average Tier 1 ratio was 12.5% while average Total Capital Adequacy Ratio stood at 16%22). Hong Kong’s existing capital rules are also already largely aligned with the tightened definition of capital23. The HKMA’s own quantitative impact study on the new capital and liquidity rules suggest that “regulatory reform would bring a net positive long-term effect for the Hong Kong economy” albeit the net benefit was estimated to be lower than that found in a separate study performed by BCBS for selected economies (HKMA: 2.11% - 2.76% of real GDP vs. BCBS: 4.3% - 5.85%, under the assumption of permanent GDP loss in banking crises)24. The milder impact reflects the already high capitalisation of Hong Kong banks, the significant use of common equity in banks’ capital base and the reliance on stable customer deposits as key funding sources (77% of total funding) 25.

22

HONG KONG’S BUSINESS COMMUNITY RESPONSE TO BASEL III CAPITAL REQUIREMENTS Confidence in meeting standards Local bankers expressed confidence in meeting the higher capital requirements. Andrew Fung, general manager and head of treasury and investment at Hang Seng Bank, believes that local banks would have no problems meeting the new standards especially given the long transitional period26. Other Hong Kong-based commentators agree, noting that unlike European and American banks, Hong Kong capital ratios are much higher27. Moreover, given that hybrids and other non-common equity capital are not common components of the capital base of Hong Kong banks, domestic banks would have no problems meeting the Common Equity Tier 1 ratio which is viewed by many as the most challenging capital requirement28. The local stock market also reacted positively on news of Basel III capital requirements, reflecting a similar confidence that Hong Kong banks would not be forced to raise fresh capital29. Fung believes that the only adjustment banks might have to make is to revise their loan portfolios in the future to attract lower capital charges30. Some fund managers, however, highlighted that banks which are intensifying expansions may face cash shortages and would have to cut dividend payout ratios given the higher capital requirements31. This could cause their stocks to fall out of favour with investors as investors generally invest in Hong Kong-listed bank stocks for their high and stable dividends32. Well-capitalised banks, however, are unlikely to be affected33. Transition period is too long Commentators in the local media opined that the 2019 implementation timeframe is too long and by 2019, another 2 financial crises could have occurred 34 . There are concerns that the long implementation timeframe could result in a scaling back of reforms as memories of the crisis fade and lobbying from the industry grows stronger35. However, the HKMA clarifies that Basel III’s long transitional period is meant “to allow unintended consequences [of the reforms] to be observed and addressed” and to recognise the current challenging economic realities36. The long implementation period thus should not be interpreted as a lack of resolve37. Divestment of non-core assets creating opportunities for new start-ups Simon Yoo, Asia-Pacific co-head of financial institutions at Citigroup, forecasts that in the new regime where capital is harder to come by, owning diversified businesses would be a challenge38. Hence, banks would be under pressure to divest riskier, non-core businesses39. Indeed, the industry has observed a number of new Asian-focused hedge funds spun out from banks’ proprietary desks and set up by managers from established funds starting out on their own40. One manager who jointly bought out the private equity arm of his bank with other managers to set up their own fund explained that an additional benefit of leaving the bank is that they would be less subjected to continually changing banking regulations41.

23

2. BASEL III COUNTER-CYCLICAL CAPITAL BUFFER Under Basel III, an additional counter-cyclical buffer of up to 2.5% of Common Equity Tier 1 could be imposed in periods of rapid credit growth and released in downturns42. HONG KONG’S OFFICIAL RESPONSE TO COUNTERCYCLICAL CAPITAL MEASURES The HKMA supports the adoption of countercyclical capital buffer but expects the transition and implementation phase to bring out new questions such as the amount of lead time to give banks to build up the buffer, the type of communication strategy to employ43, etc. Issues such as difference in opinions between home and host regulators would also have to be worked out. For example, in the event that a home regulator thinks there is credit expansion in the host country but the host regulator does not trigger the buffer, a question would be whether the home regulator should take any action44. Apart from Basel III’s countercyclical capital buffer, Hong Kong has implemented other countercyclical measures45. For instance, it actively monitors credit growth in the economy and intensifies supervisory efforts as well as issues additional guidance to banks when credit growth is deemed too rapid. In December 2010, the HKMA expressed concerns that drawing from “international experience”, the strong credit growth in the jurisdiction might partly be due to lax underwriting standards and if this is indeed the case, it would increase systemic risks to the whole banking system46. To address this concern, the HKMA would thus step up on-site examinations to monitor loan approvals47. In April 2011, the HKMA issued a public letter to Chief Executives of banking institutions, warning that loans granted by them have grown very rapidly and cautioned that the “rapid pace of credit growth is unsustainable” and could lead to “pressure on funding, liquidity and concentration”48. It then instructed banks to submit new business plans and targets for loan and deposit growth, L/D ratio and other risk indicators for the remaining 2011 to the HKMA 49. 3. BASEL III LEVERAGE RATIO Under Basel III, a non-risk-weighted minimum leverage ratio (defined as the ratio of Tier 1 capital to total exposures, including on- and off-balance sheet items) of 3% is being tested for planned migration to Pillar 1 in 201850. HONG KONG’S OFFICIAL RESPONSE TO LEVERAGE RATIO The HKMA announced that it intends to adopt BCBS implementation timetable, including transitional arrangements for the leverage ratio51 and would closely monitor effects of the new leverage ratio to ensure that it does not adversely affect banks which are fundamentally sound and conservative52.

24

4. BASEL III LIQUIDTY RATIOS Under Basel III, two liquidity standards would be introduced: (a) A minimum Liquidity Coverage Ratio (LCR) of 100% would be imposed to ensure that the

bank holds sufficient high quality assets to cover net cash outflows for 30 days in a severe stress scenario53.

Eligible assets are categorised into ‘level 1’, comprising mainly domestic sovereign bonds and ‘level 2’ which can include non-financial corporate bonds and covered bonds not issued by banks54. Haircuts are applied to level 2 assets and such assets cannot make up more than 40% of the overall stock after haircuts have been applied55.

(b) A minimum Net Stable Funding Ratio (NSFR) of 100% would be imposed to ensure that

stable funding is available to cover funding requirements over a one year period of extended stress56.

HONG KONG’S OFFICIAL RESPONSE TO LIQUIDITY RATIOS Confident in meeting standards although lack of supply of eligible assets is a challenge The HKMA does not expect banks in Hong Kong to have significant problems complying with the new liquidity standards but would take into account the issue of insufficient supply of HKD-denominated government debt and high quality non-financial corporate debt in its implementation of the LCR57. The HKMA would also provide feedback to the Basel Committee on this issue58. Banks need to begin preparation now Arthur Yuen, deputy chief executive of HKMA, urged bankers to begin preparation soon as the implementation timelines are only "deceptively long" because as part of the observation period for the LCR, banks need to complete detailed studies very soon so that regulators could report findings to the Basel Committee by 2013 for implementation in 201559. Unintended effects on corporate debt markets and stability of retail deposits On the downside, HKMA officials have highlighted that there are possible unintended adverse consequences. For one, the LCR requires banking institutions to own high quality government and public sector debt. In Asia, where debt markets are not as developed, trying to develop the corporate debt market would be even more difficult in the future as the LCR does not count corporate debt as highly liquid assets (i.e. level 1) 60. In addition, the competition amongst banks for ‘sticky’ retail deposits may actually result in retail deposits becoming less ‘sticky’ because as banks raise interest rates to attract ‘sticky’ deposits, customers become less loyal and are more ready to shift deposits to banks offering higher rates, making retail deposits a less stable funding source61. The HKMA, however, puts to rest concerns that higher costs brought about by higher deposit rates could be passed on to bank customers62. It believes that there would be minimal impact on consumers’ cost as competition in Hong Kong’s banking sector is intense63.

25

Observation period is essential Kemp believes that since the liquidity standards are un-tested and the impact of the new standards on banks’ liquidity risk management and on the corporate debt market is uncertain, the observation period is critical64. Existing liquidity measures With the introduction of Basel III liquidity ratios, the HKMA is also reviewing the relevance of its existing liquidity measures. It is conducting a quantitative impact study65 to decide whether Hong Kong banks should continue to be required to maintain 25% of liquid assets on top of deposits66. In other areas, the HKMA has decided to retain additional liquidity measures. The HKMA expects banks to continue to ensure that they have sufficient funds to continue operations for a minimum stress period of five business days under a bank-specific crisis scenario, which includes a retail deposit run, in addition to the LCR requirement 67. HONG KONG’S BUSINESS COMMUNITY RESPONSE TO LIQUIDITY RATIOS Confidence in meeting NSFR Given that the majority of Hong Kong banks have extensive retail networks and substantial deposit bases, industry commentators do not expect Hong Kong banks to have problems meeting the NSFR68. LCR may not reflect Asia’s liquidity problems However, some believe that the liquidity reform fails to reflect issues specific to Asia. Simon Topping opined that the LCR was modelled based on “liquidity problems experienced by banks in the West during the global financial crisis” such as the drying up of wholesale funding markets, whereas in Asia, liquidity problems are often caused by bank runs69. For instance, Asia’s deposit run-off rate is 20 or 30 times higher than that assumed by Basel70. Asia’s bank run problems are more acute due to lower public confidence in banks71. This is because for a long time, there is no established deposit insurance and Asia’s history is marked by massive bank runs of not just small but also large banks72. He further highlights that while Basel III’s 30-day timeframe is based on “slow-burn liquidity problems”, things in Asia move much more quickly73. Hence, he suggests, local regulators should introduce 7-day periods to reflect local circumstances74. Too much reliance on government debt Gary Wang, finance director at Dah Sing Bank in Hong Kong, opined that the list of eligible assets placed too much emphasis on government debt75. The focus on government debt forces commercial banks to hold low-yielding assets which are not part of commercial banks’ core businesses76. Another commentator close to the Asian banking sector, also highlights that “the requirement to hold large quantities of government debt perversely penalises well-managed economies” with sound fiscal policies77.

26

Insufficient supply of eligible assets The initial Basel III proposal in December 2009 was met with criticisms from countries with limited supply of government bonds including Hong Kong78. As a result, for such jurisdictions, the revised proposal allows additional options including (a) contractual committed liquidity facilities from the relevant central bank, with a fee (b) foreign currency liquid assets and (c) additional use of Level 2 assets with a higher haircut79. However, the additional options are also met with criticisms (elaborated below). Additional options are not without problems Banking experts suggest that the committed liquidity facility with the central bank increases the risk of moral hazard, as it blurs the role of the central bank as a lender of last resort 80. Topping also believes that Basel has not fully considered the extent to which foreign currency assets could be applied to a bank’s balance sheet81. Although Hong Kong is in a slightly more enviable position compared to other jurisdictions with limited supply of government bonds as banks in Hong Kong could overcome the lack of HKD denominated government bonds by buying US treasuries and not face significant currency risk given the HKD’s peg to the USD, there could still be interest rate mismatches82. In addition, Dah Sing’s Wang points out that if the bank’s liability base is HKD, there would still be a need to enter currency swaps arrangements, thereby incurring costs83. Other assets should also be eligible Wang also believes that banks in Hong Kong and Asia should be allowed to count high-quality prime residential mortgages with low loan-to-valuation ratios as eligible assets since such assets have proven for many decades to be of high quality and especially if they are accepted by central banks as collateral of sufficiently good quality84. Doubts over whether rules would be adapted for local circumstances However, there are doubts that local regulators would have much room to deviate from international norms given the practice of peer reviews by fellow regulators from other jurisdictions and the value Basel III places on consistency85. 5. ENHANCING RISK COVERAGE Under Basel III, capital requirements for counterparty credit risk exposures in derivatives, repo and securities financing activities will be strengthened86. Incentives are also introduced to move Over-the-Counter (OTC) derivative contracts to central counterparties (CCP)87. HONG KONG’S OFFICIAL RESPONSE TO ENHANCING RISK COVERAGE HKMA intends to implement Basel III reform package and is currently studying the feasibility of adopting advanced methods for counterparty credit risk calculations 88. Hong Kong has also committed to establishing a clearing house89.

27

HONG KONG’S BUSINESS COMMUNITY RESPONSE TO ENHANCING RISK COVERAGE Keith Noyes, Regional Director (Asia Pacific) at the International Swaps and Derivatives Association (ISDA) based in Hong Kong, observed that the G20 did not specify whether CCPs have to be home country CCPs or global CCPs90. An Asian regulator opined that it would be difficult to rely on foreign CCPs if they are not regulated by the host countries as there is no certainty that local banks would be treated fairly and equally by the foreign CCPs91. Given so, it is not surprising that a number of countries in Asia including Hong Kong, China, India, Japan, South Korea and Singapore are creating or have created home country CCPs92. However, Noyes pointed out that Asian markets are not big or liquid enough to ensure the viability of home country clearing entities93. According to a Bank for International Settlements Triennial Survey, Asia Pacific interest rate derivatives markets account for only about 8% of total global volume as of 30 June 201094. HKD swaps, for example, are substantially cleared through the London Clearing House95. The unfortunate implications of this are that clearing houses may have to either accept less liquid and less standardised products to boost volume which introduces greater risk or impose higher clearing fees which may discourage end users from hedging96. An additional complication could arise when trades are entered with foreign counterparties. If regulators mandate that banks must clear trades through a local clearing house, which appears to be the case for Hong Kong, it is unclear which country’s clearing house should be used97. In complying with the new clearing rules, banks may also incur additional costs as some Asian clearing houses are/would be using customised platforms which do not interface easily with banks systems resulting in the need for banks to purchase additional technology solutions98. SECTION 3: ADDITIONAL MEASURES ADOPTED/BEING CONSIDERED BY HONG KONG BEYOND BASEL III

1. LOAN-TO-VALUE (LTV) & DEBT SERVICING RATIO (DSR) The HKMA has introduced several prudential measures, including: (a) Imposing maximum LTV ratios based on the value of the properties99:

Residential Property Value (HK$)

Maximum Loan-To-Value (LTV)

10 – 12 million 50%

7 – 10 million 60% (with maximum loan amount capped at HK$5 million)

Below 7 million 70% (with maximum loan amount capped at HK$4.2 million)

(b) Lowering the above maximum LTV ratios by 10% if the principal income of the loan applicant

is not derived from Hong Kong100;

28

(c) Imposing maximum LTV ratio of 40% for net worth-based mortgage loans as it is difficult to regularly verify borrowers’ net worth101;

(d) Imposing maximum LTV ratio of 50% for non-owner-occupied properties, properties held by

companies and commercial/industrial properties102; (e) Imposing 50% cap on DSR103; and (f) Limiting stressed DSR to 60%. Stressed DSR is computed assuming a 2% increase in mortgage

rates104. Used as countercyclical prudential measures, the HKMA proactively lowers LTV ratios when it observes warning signs such as:

high transaction prices in government land sale auctions

high property prices above 1997 peaks and

unusually low mortgage rates e.g. 1% vs. more typical rates of 10%105. Prudential measures are also introduced in response to supervisors’ findings during onsite examinations. For example, supervisors noted that banks faced difficulties assessing the debt servicing ability of borrowers who derive income principally from overseas106 and thus direct that maximum LTV ratios for such applicants be lowered by a further 10%. In addition to the above prudential measures, the HKMA disallows the practice of principal repayment holidays whereby borrowers service only interest payments during the holidays and repay principal only after the holidays end107. Banks are also expected to meet industry best practices published by the HKMA such as those relating to the computation of DSR and proof of income108. The government also manages the supply of land to address supply-side imbalances109. Official evaluation of effectiveness The HKMA sees LTV as a cornerstone of its policies that has survived market innovation viz. securitisation and contributed to the stability of the banking system110. So convinced it is of its effectiveness that Joseph Yam, then Chief Executive of HKMA, wondered publicly why developed economies did not adopt LTV ratios as one of their prudential measures111. An econometric analysis performed by the HKMA on 13 economies confirmed that the LTV ratio is an effective tool in reducing systemic risk arising from property market cycles112. Systemic risk is contained by reducing the sensitivity of mortgage default risk to property price shocks113. For instance, if the maximum LTV ratio had been 90% instead of 70% before 1997, the delinquency ratio of a 40% decline in property prices in 1997–1998 would have been 1.7% instead of the actual level of 0.84% as of end-1998114. Using data from three economies that have adopted LTV, the study also found that the effect of LTV policy is transmitted through lowering household leverage rather than directly dampening property market activities115. The tool is not without adverse impact though. LTV limits could impose higher liquidity constraintsa on home buyers but mortgage insurance programmes (see Annex at end of Chapter) could and were

a Home buyers may not qualify for a mortgage even if they could service the loan repayments because they

cannot afford the substantial down payments.

29

empirically found to mitigate this drawback without reducing the effectiveness b of LTV as a prudential tool116. More significantly, this means that liquidity constraints on home buyers are not sufficient reasons to reject LTV policy117. RESPONSE TO LTV & DSR The local media credits HKMA’s policy to cap lending to home buyers as the key reason why mortgage default rates were “minuscule” even when property prices fell118. It was also seen as a factor which enabled banks to escape the Global Financial Crisis relatively unharmed119. Other commentators see LTV limits as “a targeted way to control asset bubbles brewing” which is more effective than capital or liquidity controls as those measures merely create a buffer to absorb losses but do not discourage banks from risky lending120. 2. POSSIBLE RING-FENCING OF LIQUIDITY Regulators are considering the idea of ring-fencing liquidity via subsidiarisation121. Subsidiarisation is to be contrasted with branch offices: subsidiaries are often self-sufficient while branches could lend by tapping on head offices’ capital122. There are pros and cons of each model. Subsidiaries: Host supervisors tend to have more supervisory power over subsidiaries operating in their jurisdictions123. Crisis resolution might also be simpler124. However, the deliberate segregation of capital and liquidity into different pools could be seen as less efficient and even de-stabilising as funds could not be easily moved from stronger parts of the group to the weaker areas125. Branches: Branches have greater flexibility as they could tap on head office’s capital126. But this may lead to branches becoming too reliant on head offices and in times of crisis, the expected support might not be available127. Regulators could also ring-fence liquidity for branches through asset maintenance requirements which mandate institutions to maintain assets in the jurisdiction to meet certain types of claims. Hong Kong imposes this through its deposit insurance scheme which requires sufficient assets to be maintained in Hong Kong to meet claims that are protected by the deposit insurance scheme128 . RESPONSE TO RING-FENCING OF LIQUIDITY The criticism Commentators point out that large international banking groups derive substantial cost savings from holding liquidity centrally and allocating it to locations with the most needs129. Hence, many bankers are against holding liquidity in different jurisdictions on a silo basis130.

b Although the mortgage insurance programme (MIP) in effect enables households to assume higher leverage,

the delinquency ratio of the MIP was found to be lower than that of the Hong Kong banking sector which means that overall banking stability has been enhanced.

30

A Hong Kong-based chief risk officer for Asia-Pacific believes that such policy moves are in response to political pressures and created by “over-zealous” host regulators who want to be seen as being pro-active instead of being reliant on home regulators131. A treasurer at an international bank with a Hong Kong presence further added that such a policy “creates fragility in the banking system for a hypothetical and small probability event that we hope won’t happen again” 132. The merits Simon Topping, Hong Kong based partner at KPMG and former regulator at the HKMA, highlights that there are advantages to ring-fencing. In a crisis, even if the bank group gets into trouble, the local subsidiary could still continue operations133. In addition, not all banks are vehemently objecting to the idea of ring-fencing. HSBC, for one, seems better placed as it is the banking group’s policy for “each banking entity [to] be self-sufficient when funding its own operations” 134. SECTION 4: HONG KONG’S RESPONSE: SUMMARY & CONCLUSION

Hong Kong supports and confirms that it would be adopting the Basel III reform package. As an international financial centre, it sees it necessary to adopt international standards. Notwithstanding the fact that Hong Kong banks have emerged relatively unscathed from the Global Financial Crisis, it remains interested in Basel III because Basel III is expected to impact Western economies and Asian economies are still tied to the West. Nevertheless, there is a desire, both from the regulators and business community, for more Asian voices and for Asian circumstances to be taken into account. At a more specific level, individual Basel III recommendations are mostly well-endorsed. However, liquidity ratios have caused concerns given the lack of domestic government bonds and possible unintended knock-on effects. The viability of moving OTC derivatives to Asian clearing houses is also in doubt given the low volume of Asia-Pacific derivatives. While Hong Kong would be implementing the Basel III reform package, it has supplemented the package with additional local measures. The Global Financial Crisis and Asia’s own history of banking crises have convinced the jurisdiction that a more conservative approach is necessary.

31

ANNEX MORTGAGE INSURANCE PROGRAM (MIP) The MIP was designed as a tool to help financial institutions better manage credit risks in their mortgage lending portfolios by insuring a portion of the mortgage loan say from 80% up to 95% of the property value135. For the banking regulator, such a product could help transfer the riskier portion of mortgage lending outside the banking sector136. For the banks, it means that lending at higher LTV does not have to be accompanied by higher credit risk as the riskier portion of the mortgage could be transferred to the insurer137. Regulatory concessions such as reduction in capital charges provide further incentives138. Unlike securitisation, however, the mortgage loans continue to be retained on the banks’ books139 and hence banks should still be motivated to maintain sound underwriting standards. Another layer of safeguard comes from the insurer. An insurer that possesses in-depth knowledge of local property market140 would help to manage the risks associated with such a product.

32

CHAPTER 3: SINGAPORE

We now turn to Singapore. Similar to earlier chapters, the first section summarises the general reaction towards Basel III while the second section focuses on responses to specific Basel III recommendations. The third section highlights additional measures taken by Singapore beyond Basel III. Within each section, whenever possible, views of regulators and business commentators are presented. SECTION 1: SINGAPORE’S RESPONSE TOWARDS BASEL III AS A WHOLE

THE OFFICIAL RESPONSE Support for Basel III Singapore credits the Basel Committee for “devising a new regulatory framework that underpins and fosters a more resilient global banking system”1 and which also supports global economic recovery through carefully phased-in transitions2. It believes Basel III would improve the stability of the banking sector through strengthening the resilience of individual banks during periods of stress3 and supports the Committee’s reforms. Balancing global consistency and national circumstances However, it states clearly that while globally consistent regulatory policies minimise regulatory arbitrage, regulation is a “national prerogative” that needs to be adapted to local circumstances to be effective4. It further points out that imposing identical rules could inadvertently reduce diversity in the financial system by creating institutions with similar risk appetites and asset-liability mismatches, resulting in a less resilient system5. Hence, it believes Basel III should be seen as a minimum standard which countries could work off and adapt6. Why emerging economies are different from developed economies To illustrate the differences in national circumstances, officials from the Monetary Authority of Singapore (MAS) highlighted that the priority for many emerging economies is to reform the banking system and deepen capital markets to facilitate economic growth, rather than to recapitalise and reduce leverage7. Emerging countries’ banks also vary in “size, sophistication and systemic significance”, with either only domestic influence or regional presence8. In the case of Asia, banks also manage their businesses differently because traditional banking services are still required for the types of economic activities in the region9. Further, the experience

33

of the Asian financial crisis has created a greater sense of awareness for risk and a preference for prudence amongst Asian financial institutions10. Officials however were careful to clarify that adapting rules to national circumstances does not mean that higher regulatory standards would not be met11. Why Singapore is different Specifically on Singapore, officials point out that “Singapore is at a different starting point from the advanced economies”12. While advanced economies have gone through periods of deregulation and relied heavily “on markets to self-correct and on financial institutions to manage their own risks”, Singapore has always adopted prudential measures, including capital, liquidity and provisioning requirements, that are more stringent than international standards13. Local banks have also been responsible in their lending practices and interbank markets have been operating with sufficient liquidity14. However, it believes it needs to continue keeping standards high given that it is operating in a region of developing markets where there are inherent risks15. In addition, as a small and open economy in an interconnected global financial system, it is also vulnerable to contagion risks16. Competitive advantage Officials see Singapore’s high prudential standards and rigorous supervision as a competitive advantage because “[i]n the post-crisis landscape … a premium [would be] placed on well-regulated financial centres that have strong economic fundamentals”17. Being an international financial centre situated in the epicentre of growth, Singapore also sees opportunities in facilitating trade and investments in the region18. THE BUSINESS COMMMUNITY RESPONSE Asia’s advantage Business consultants analysed that because Asian banks are better positioned to meet Basel III’s requirements, they would not face the same constraints as European and American banks19 which

have to raise capital and deleverage20. Thus, while foreign banks have to work through the implications of Basel III, Asian banks could focus on domestic and regional opportunities21. Analysts agree that the three Singapore banks which all have healthy capital ratios would similarly have an advantage over foreign banks which would have to incur higher costs to meet the new standards22. Other business implications Others foresee that the more stringent regulatory rules would create higher barriers to entry and widen the gap between small and large institutions23. Internally, banks would also have to build up information technology infrastructure and data management systems to better manage risk24.

34

Criticism The local banking community is not without criticism of Basel III though. David Conner, chief executive of OCBC Bank in Singapore, believes that Basel III did not address the root cause of the Global Financial Crisis. In his view, the crisis was caused by lax lending practices which fuelled a real estate bubble but these weaknesses were not addressed by Basel III25. SECTION 2: SINGAPORE’S RESPONSES TOWARDS SPECIFIC BASEL III RECOMMENDATIONS

1. BASEL III CAPITAL REQUIREMENTS Basel III has increased minimum Common Equity from 2% to 4.5% and minimum Tier 1 Capital from 4% to 6% but held minimum Total Capital the same at 8%26. An additional conservation buffer of 2.5% which banks could draw on in times of stress would be imposed27. With transitional arrangements, the new rules would be fully implemented by 201928. SINGAPORE’S OFFICIAL RESPONSE TO BASEL III CAPITAL REQUIREMENTS In keeping with its tradition of imposing higher standards than international norms29, the MAS requires locally-incorporated banks to meet Basel III earlier and at a higher standard30. Higher standards Banks will be required to hold minimum Common Equity of 6.5% of risk-weighted assets, minimum Tier 1 Capital of 8% and Total Capital of 10%31. In addition, banks will also be required to hold the additional conservation buffer of 2.5% in Common Equity32. In all, this means that banks will be required to hold 2% more Common Equity than Basel III rules require. The MAS provided the following reasons for requiring higher standards of its local banks33: (a) Systemic importance The minimum capital requirements under Basel III do not assume that banks are systemically important, whereas all 4 Singapore-incorporated banks (the 3 local banks and Citibank’s Singapore subsidiary) are systemically important in Singapore given their significant retail presence. As these banks account for more than half of the resident deposits and loans in Singapore, higher capital requirements would better protect depositors, safeguard stability and give Singapore a better chance of avoiding the substantial societal costs of a financial crisis. (b) Benefits outweigh costs MAS’ emphasis on high quality Common Equity capital is based on the Basel Committee’s research which showed that during the crisis, banks which failed or required government assistance had significantly lower levels of Common Equity compared to those which did not. In terms of cost, higher Common Equity requirements are not expected to adversely affect economic output. In fact, the Basel Committee’s assessment is that the economic costs of going above Basel minimum requirements would still be less than the costs of banking crises.

35

(c) Preserve reputation The MAS believes that its reputation as a well-regulated, stable and open financial centre is an “attractive value proposition” and it should continue to maintain the high standards “which have become associated with Singapore” 34. Earlier adoption The table below compares MAS transition schedule (un-shaded rows) against Basel III’s (shaded rows). Singapore banks would meet Basel III’s minimum standards by 2013, 2 years ahead of Basel’s schedule while higher capital requirements imposed by MAS would be gradually phased in and fully complied with by 201535. The implementation schedule for the capital conservation buffer would however be aligned to Basel III’s transition schedule36.

Dates are as of 1 January 2013 2014 2015 2016 2017 2018 2019

Minimum CET1 CAR MAS 4.50% 5.50% 6.50% 6.50% 6.50% 6.50% 6.50%

Basel III 3.50% 4.00% 4.50% 4.50% 4.50% 4.50% 4.50%

Minimum Tier 1 CAR MAS 6.00% 7.00% 8.00% 8.00% 8.00% 8.00% 8.00%

Basel III 4.50% 5.50% 6.00% 6.00% 6.00% 6.00% 6.00%

Minimum Total CAR MAS 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Basel III 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%

Capital Conservation Buffer MAS 0.625% 1.25% 1.88% 2.50%

Basel III 0.63% 1.25% 1.88% 2.50%

Minimum CET1 CAR plus Capital Conservation Buffer

MAS 4.50% 5.50% 6.50% 7.125% 7.75% 8.38% 9.00%

Basel III 3.50% 4.00% 4.50% 5.13% 5.75% 6.38% 7.00%

Minimum Total CAR plus Capital Conservation Buffer

MAS 10.00% 10.00% 10.00% 10.63% 11.25% 11.88% 12.50%

Basel III 8.00% 8.00% 8.00% 8.63% 9.25% 9.88% 10.50%

The MAS explained that earlier adoption is possible as Singapore banks, being well-capitalised, are well-positioned to adopt Basel III earlier37. Moreover, the longer transition period under Basel III was primarily introduced to support the economic recovery of countries deeply affected by the crisis whereas Singapore’s “economy is well above pre-crisis levels”38. SINGAPORE’S BUSINESS COMMUNITY RESPONSE TO BASEL III AND MAS CAPITAL REQUIREMENTS Strengthens Singapore’s position as financial hub Top bankers agree that the changes would contribute to the resilience of the industry and “position Singapore as a global financial centre” 39, paving the way for Singapore to be the “Switzerland of the East” with “a track record for safety, stability and clockwork efficiency” for wealth management40. A local editorial commended the move to impose standards higher than Basel, seeing it as “risk-appropriate” given Singapore’s positioning as a financial hub41. It also attributed the markets’ continued confidence in Singapore through various crises to the state’s readiness to impose higher standards42.

36

Positive for local banks Analysts also see Basel III levelling the playing field for Singapore banks which have “historically been penalised for poor ROEs due in part to lower leverage” as foreign banks may now have to pare down lending and raise capital43. Vishnu Varathan, economist for Asia at Capital Economics, pointed out that MAS’ higher capital requirements would place local banks on par with some of the systemically important financial institutions which suggest that Singapore banks are well-positioned to compete for regional businesses44. Moody’s further sees MAS’ conservative capital measures as credit positive for Singapore banks45. Confidence in meeting standards Given that the 3 local banks are amongst the most well-capitalised in Asia, with core Tier 1 ratios of 11.5%-13%, exceeding even Hong Kong banks’ core Tier 1 ratios of 8-10%46, many do not foresee the need for local banks to raise new capital to meet the new rules47. Banks’ assurance Each of the 3 local banks have also come out to assure investors that they could meet MAS’ capital requirements without having to raise fresh capital or cut dividends or scale down on their growth plans48,49. Stock market concurs The stock market expressed similar confidence as shares of the 3 local banks rose after MAS’ announcement of tougher capital requirements50. Analysts agree Equity analysts call the new capital requirements a “non-event” 51 and share the same belief that the 3 local banks would not have to raise additional capital or cut dividends52. More should be done On the other hand, a few such as Hugh Young, managing director of Aberdeen Asset Management Asia, opined that Basel III Tier 1 requirements should have been double digits given how deeply the Global Financial Crisis had affected the world economy53. Impact on banks’ businesses Possible change in focus The Wall Street Journal Asia anticipates that there would be “pressure on banks to shed noncore assets or assets that tie up too much capital”54. Indeed, Singapore’s largest bank, DBS has announced plans to sell its asset management operations, a business that would otherwise require substantial capital to build up through acquisitions55. Others forecast that attention would be shifted to less capital intensive areas such as private banking56.

37

Impact on lending and borrowing Thomas Lam, group chief economist at OSK-DMG based in Singapore, believes that banks in general would become more cautious when lending57. Conner, chief executive of OCBC, one of the three local banks, predicts that the new capital rules may lead to some banks charging more on their loans58. To keep borrowing costs low, corporations may have to consolidate their banking needs with a couple of banks so as to incentivise banks to lower their fees on the basis that revenue could be earned through multiple products59. It may also mean that corporates with the means to do so may try to raise funds through debt capital markets60. Foreign banks that do not meet requirements…. Some expect that banks that do not currently meet Basel III capital requirements would be pressured by the market to meet the standards earlier than the official transitional arrangements and would see selling pressures on their shares as investors anticipate capital-raising to dilute their existing shareholdings61 and reduce returns on equity62. … and those that do On the other hand, analysts predict that international banks such as HSBC which are more than able to meet the new capital requirements would compete even more aggressively now with local banks as they no longer need to worry about capital requirements63. 2. BASEL III COUNTER-CYCLICAL CAPITAL BUFFER Under Basel III, an additional counter-cyclical buffer of up to 2.5% of Common Equity Tier 1 could be imposed in periods of rapid credit growth and released in downturns64. SINGAPORE’S BUSINESS COMMUNITY RESPONSE TO COUNTERCYCLICAL CAPITAL MEASURES Research analysts believe that countercyclical measures address the gap in Basel II which had forced banks to restrict lending in bad times and derailed government efforts to stimulate the economy65. Bankers acknowledge that there is conceptual merit in introducing countercyclical measures but opined that credit growth as a measure of good/bad times is too “broad-brush” and “awkward in terms of implementation” 66. Bankers themselves showed initiative in monitoring credit growth. For instance, UOB CEO Wee Ee Cheong cautioned that loose monetary conditions of the West have driven up asset prices and if consumer debts are left unchecked, another Asian crisis could occur when interest rates return to normal levels67. However, he pointed out that various indicators such as debt-service ratios suggest that Singapore is only in the early stages of the credit cycle and consumer debt levels are still reasonable68.

38

3. BASEL III ADDITIONAL CAPITAL CHARGES FOR SYSTEMICALLY IMPORTANT FINANCIAL INSTITUTIONS (SIFIs)

Recent proposals recommend imposing capital surcharges ranging from 1% to 2.5% on global SIFIs69. SINGAPORE’S OFFICIAL RESPONSE TO BASEL III CAPITAL REQUIREMENTS National circumstances Officials reiterated their stand on the need for regulations to be adapted to suit local circumstances, pointing out that “many emerging economies have banks that are systemic only in their local context”70. Possible blind spot The MAS, however, highlighted that small banks with similar business strategies and positions could also pose systemic risk if they exit their positions at the same time71. Caution against additional charges Singapore’s Prime Minister cautioned against imposing additional capital requirements on global banks as that could encourage capital to move to riskier and less regulated parts of the financial sector72. He also credited large global banks for driving international finance and increasing liquidity in small markets and believe that such banks should be allowed to stay competitive73. 4. BASEL III LIQUIDTY RATIOS Under Basel III, two liquidity standards would be introduced: (a) A minimum Liquidity Coverage Ratio (LCR) of 100% would be set to ensure that banks hold

sufficient high quality assets to cover net cash outflows for 30 days in a severe stress scenario74.

Eligible assets are categorised into ‘level 1’, comprising mainly domestic sovereign bonds, and ‘level 2’, which can include non-financial corporate bonds and covered bonds not issued by banks75. Haircuts are applied to level 2 assets and such assets cannot make up more than 40% of the overall stock after haircuts have been applied76.

(b) A minimum Net Stable Funding Ratio (NSFR) of 100% would be set to ensure that stable

funding is available to cover funding requirements over a one year period of extended stress77.

SINGAPORE’S OFFICIAL RESPONSE TO LIQUIDITY RATIOS Officials welcome the new focus on liquidity risk, a risk previously neglected in global standards78. Regulators believe that if liquidity issues are not dealt with in a timely manner, an individual bank’s liquidity problems could easily affect the rest of the banking sector through a crisis of confidence79.

39

Existing liquidity requirements Before Basel III, Singapore was one of the first jurisdictions to require banks to hold minimum amount of liquid assets80 as a buffer against liquidity stress situations81. As a result, officials believe Singapore banks are well positioned to meet the liquidity ratios required under Basel III82. Under MAS’ existing requirements, banks are required to hold Minimum Liquid Assets (MLA) amounting to 16% of its qualifying liabilities83. Banks may also apply to the Authority for a bank-specific MLA cap and if approved, such banks would be required to hold minimum assets based on their cash flow volatility subject to a floor of 5% of qualifying liabilities and an MLA cap of between 10% and 15%84. The exact MLA cap assigned would depend on MAS’ assessment of the strength of the bank’s liquidity risk management85. Banks are required to maintain at least 50% of the MLA requirements in Tier 1 assets comprising cash and Singapore Government Securities while other assets could be made up by investment-grade SGD-denominated debt securities issued by statutory boards, banks and corporates86. The MLA must be maintained at all times but can be utilised in times of liquidity stress87. Steps taken to meet Basel III’s standards To enable banks to meet the liquidity requirements under Basel III, MAS is working to increase the pool of liquid assets in the market and is “collaborat[ing] with other central banks to expand eligible collateral in the MAS Standing Facility”88. For instance, S$6 billion worth of one-month MAS Bills were issued in April 2011 and longer tenor issues are in the pipeline89. The bills are negotiable and could either be sold or pledged as collateral in the repo market or with the MAS90. The list of eligible collateral for the MAS Standing Facility has also been expanded to include Euro and Sterling cash, French, German and British government securities which could be pledged to obtain Singapore dollar91. Similar arrangements are being finalised for US Treasury bills and notes92. SINGAPORE’S BUSINESS COMMUNITY RESPONSE TO LIQUIDITY RATIOS Impact on local banks Local analysts expect liquidity ratios to have a “greater impact on banks” in Singapore than capital ratios93. Indeed, local bankers have raised several issues, as elaborated below. (a) Insufficient supply of eligible liquid assets In response to feedback from several countries such as Australia, Hong Kong and Singapore, that there is a limited supply of local government bonds94, Basel has added 3 options which such countries could utilise: contractual committed liquidity facilities from the central bank; foreign currency liquid assets and additional use of Level 2 assets with a higher haircut95. However, local bankers are still concerned. Pattijin, chief risk officer at Singapore’s DBS bank highlighted that many Asian countries would be “forced to take on undue forex risk by buying US Treasuries, bunds or JGBs [Japanese government bonds] into their liquidity portfolio”96. In his view, Basel has also unrealistically excluded trading assets from the liquidity pool97.

40

(b) Unintended effect on systemic risk Pattijin also pointed out that liquidity ratios requirements may result in banks hoarding up liquidity in times of crisis which could “hinder the flow of liquidity” 98. He believes a solution could be to introduce a similar counter-cyclical mechanism for liquidity99. (c) Increase in business costs Bankers also expect liquidity requirements to affect revenue and increase business costs. Making banks hold low-yielding liquid assets would dent revenue and banks would likely try to make up the shortfall in revenue elsewhere, possibly by charging more on loans100. In addition, as debt issued by financial institutions cannot be considered eligible liquid assets, raising funds would be more difficult for banks in the future, which would further add to the operating cost of banks101. More should be done Apart from the implementation challenges highlighted above, other commentators opined that Basel III has not sufficiently addressed liquidity issues. Mark Greene, CEO of business analytics provider Fico in an interview with the local press opined that regulations are not “fully brought up to speed or up to date” and more analysis needs to be done to determine “the right level of liquidity”102. 5. ENHANCING RISK COVERAGE Under Basel III, capital requirements for counterparty credit risk exposures in derivatives, repo and securities financing activities will be strengthened103. Incentives would be introduced to move Over-the-Counter (OTC) derivative contracts to central counterparties (CCP)104. SINGAPORE’S OFFICIAL RESPONSE TO ENHANCING RISK COVERAGE Support for Basel III Singapore agrees that “once-neglected risks such as counterparty credit risk” should be brought to the “forefront”105. Officials also welcome the move by the Singapore Exchange, the country’s stock exchange, to offer clearing services for OTC financial derivatives to help market participants better manage counterparty credit risks106 and promote the “orderly growth of derivative activities” in Singapore107. Opportunity for city-state As Asia is expected to lead the way to global recovery, officials also see providing the infrastructure to manage counterparty risks as a means to enhance Singapore’s role as a regional risk management centre108 and financial hub 109.

41

SINGAPORE’S BUSINESS COMMUNITY RESPONSE TO ENHANCING RISK COVERAGE Interest in central clearinghouse The Singapore Exchange launched the first clearing service for OTC financial derivatives in Asia in 2010110, expanding its clearing services from commodities, energy and freight derivative contracts to financial derivatives such as interest rate swaps and plans to include FX forwards in its service offerings in the near future111. Within 4 months from launch, 11 global and local financial institutions, which together account for more than 90% of the trades in such products in Singapore112, have signed up as members113. Enhances positioning of Singapore The Singapore Exchange believes that such a clearing service would facilitate the growth in interest rate and foreign exchange derivatives trading and enhance Singapore's global standing as a market for such products114. Insufficient Volume? Notwithstanding that Singapore is the second largest forex trading centre in Asia and the world's fifth largest OTC derivatives trading hub, some have cautioned that trading volumes in Asia-Pacific are still too low to ensure the viability of continent-wide clearing houses115. SECTION 3: ADDITIONAL MEASURES ADOPTED/PROPOSED BY SINGAPORE BEYOND BASEL III

1. LOAN-TO-VALUE (LTV) The MAS has imposed the following LTV limits116: (a) 50% for property purchasers who are not individuals (b) 60% for property purchasers who are individuals with outstanding housing loans (c) 80% for property purchasers without any outstanding housing loans (d) 90% for public housing loansc Purpose of LTV Officials use LTV as a form of buffer for losses, to constrain credit growth117 and to encourage property buyers to be prudent in their purchases118. The MAS changes the LTV limits depending on property market activities and especially when prices are at risk of moving out of line with economic fundamentals119. For instance, in February 2010 when the market was at risk of overheating given the artificially low global interest rate environment, the LTV limits were lowered120. Similarly, in August 2010 when the government observed that prices have increased by a significant 11% in the first half of 2010 and have exceeded 1996 Q2 historical peaks121, it again lowered the LTV limits.

c LTV for public housing is higher than others because there are rules preventing the speculation of public housing such as minimum owner

occupation period and the restriction of 1 public housing per household.

42

Advantage over broad-based counter-cyclical buffers Officials believe that although the LTV is a simple basic tool, it is more targeted than broad-based counter-cyclical buffers as credit growth is controlled without affecting the availability of credit to other sectors such as corporations and small-and-medium enterprises122. Why Asia needs to pay attention to property bubbles The MAS points out that Asia is particularly vulnerable to property bubbles because investors tend to believe that property prices can only increase in growing economies123. However, if global economic recovery turns out to be weaker than expected, prices would correct downwards and buyers would suffer capital losses124, affecting not just their own finances but also those of the economy as a whole125. On the other hand, if the global economy recovers, interest rates would rise and households that have over-leveraged themselves would also suffer126. RESPONSE TO LTV Effective cooling measures Many bankers expect the measures to curb speculation127 and slow down the increase in private home prices128 and home loan applications129. Although housing loans make up more than 80% of overall loan growth from August 2008–July 2010130, bankers have taken the measures positively, believing that the measures would create a more stable and sustainable property market for the long term131 which is “good for the economy and Singaporeans” 132. Pre-emptive Analysts also see the measures as pre-emptive moves to discourage additional liquidity from flowing into Singapore following developed economies’ quantitative easing133. It would also minimise the flow of hot money that could be channelled to Singapore after China and Hong Kong introduced property market restrictions134. 2. OTHER PROPERTY MARKET RESTRICTIONS In addition to LTV limits, the government introduced a Seller’s Stamp Duty of 16%, 12%, 8% and 4% of sales proceeds respectively for properties sold in the first, second, third and fourth year after purchase, to discourage short-term speculation135.

To temper supply, the government also increased sites available under the Government Land Sales programme136. RESPONSE TO OTHER PROPERTY MARKET RESTRICTIONS Many observed that such measures are the “most drastic in recent times” and would most likely slow loan growth137. Bankers and analysts also agree that such policies are effective deterrents against speculative activities as the stamp duty is likely to wipe out any potential gains138. However,

43

those who genuinely need to sell off their properties, even at a loss, would also be inadvertently affected139. 3. LOAN LOSS PROVISIONING When FRS39 was adopted in Singapore in 2005, the MAS was concerned that it would lead to a delayed recognition of loan losses as under FRS39 a “loss event” has to take place before impairment could be recognised and a number of banks did not have sufficient “historical loan loss data over a full credit cycle, or adequate systems to track and correlate loan loss data to loss events”140. Hence, the MAS issued supervisory guidelines setting out requirements for banks’ credit review processes and how appropriate provisions should be established141. In particular, banks that lacked sufficient data or did not have the necessary systems were required to set aside minimum collective impairment provisions of 1% of net loans and receivables142. The MAS reported that “in many cases, such minimum level of collective impairment provisions helped create some prudential buffers that enhanced [banks’] resilience in the financial crisis of 2008/09”143. 4. RING-FENCING OF LIQUIDITY Foreign bank branches in Singapore are required to maintain a minimum amount of assets in safe and liquid Singapore dollar denominated and Singapore domiciled assets144, proportionate to their liabilities145. The asset maintenance requirement was deemed necessary as “the resolution of cross-border bank insolvencies is often complex and drawn-out, and there is usually uncertainty concerning the amount and speed of any recovery”146. RESPONSE TO RING-FENCING OF LIQUIDITY Debate over conceptual merit Although local bankers could see how such a measure may provide greater assurance to the public, they are not convinced that this is the key to preventing a bank collapse147. In spite of the fact that local bankers are not directly affected by the MAS regulation which is targeted at foreign bank branches in Singapore, local bankers too have expressed concerns because similar regulations in other parts of Asia, for example Hong Kong, would be a challenge for their branches there. Lam Kun Kim, executive vice-president and head of global treasury at OCBC in Singapore, explained that keeping liquidity in a country where a bank does not have “natural presence” and substantial retail deposit base is a challenge as such banks would have to rely on the interbank funding market148. Elbert Pattijn, chief risk officer at DBS in Singapore highlighted the apparent contradiction of such measures with what he deem is “the spirit of Basel III [which] is aimed at group consolidated risk

44

management”149. Ring-fencing would mean that liquidity cannot be re-distributed to parts of the group with “pressing” needs and this could “detrimentally affect the group as a whole” 150. A senior investment banker based in Singapore also opined that such policies “reduce the efficiency of global capital exactly at the time it is most needed” 151. Impact on banks’ businesses: Local vs. Foreign David Conner, chief executive of OCBC in Singapore notes that such rules would “give local banks in each country an advantage over foreign banks” because making banks gather local deposits outside of their home country instead of letting them tap on funds from the head office would be more costly152. As funding cost increase, foreign banks would likely have to charge more for loans153. This could mean that in future multinational corporations would increasingly bank with local banks in various countries instead of relying on a few global banks for the entire group’s banking needs154. 5. FOCUS ON SUPERVISION Officials believe that “beyond good rules… the most striking area is the critical need … to strengthen supervision”155. The MAS defines effective supervision as “unapologetically firm”, “grounded on a good understanding of the nature of the institutions and the financial system”, capable of independent thinking and the “willing[ness] to enforce out-of-bound markers rigorously” 156. Singapore’s Prime Minister further views supervision as a means to prevent over-regulation as regulation, supervision and resolution are complementary157. Emerging economies’ challenge However, effective supervision is a challenge in emerging economies. For one, effective supervision requires competent staff 158 . However, as banking systems are growing rapidly in emerging economies, the competition for talent is also intense159. In addition, regulators in emerging economies are more likely to face political pressures to exercise regulatory forbearance or to allow credit growth in order to support broader economic growth160. RESPONSE TO FOCUS ON SUPERVISION The IMF in its annual assessment in 2010 credited “Singapore’s strong supervision and risk management systems” as being “crucial in safeguarding the financial stability [in Singapore] in the global downturn” 161. 6. ENHANCE CORPORATE GOVERNANCE The MAS believes that regulations cannot replace the role of the Board and senior management in ensuring effective risk management162 and has proposed the following changes to enhance the corporate governance framework for locally-incorporated banks163,164:

45

(a) To ensure that the Board and directors have the appropriate skills, the Board should be assessed annually for its skills and a continuous development programme should be developed for the banks’ directors.

(b) To ensure that directors set aside sufficient time to perform their roles, the Nominating

Committee (NC) should set expectations of the time commitment required of each director. In addition, alternate directors cannot be appointed except in exceptional circumstances for limited periods.

(c) To ensure that directors serve as adequate check and balance to the management, the

definition of independent directors is proposed to be tightened. Independent directors should not be related to any substantial shareholders or suppliers of material services to the banks. Directors would also generally not be considered independent after serving 9 continuous years on the Board. The number of independent directors on the Board, NC and Remuneration Committee (RC) is also proposed to be increased to majority.

(d) To ensure that management’s incentives are aligned to the long-term interests of the

company, the RC should incorporate the Financial Stability Board’s Principles and Implementation Standards for Sound Compensation Practices into the banks’ remuneration frameworks.

(e) To facilitate effective risk management, dedicated risk management committee should be

set up. The appointment of the Chief Risk Officer should also be approved by the MAS.

SECTION 4: SINGAPORE’S RESPONSE: SUMMARY & CONCLUSION

Singapore officials support Basel III but clearly believe in the need for countries to be able to adapt global rules to suit varying national circumstances. The country’s desire to establish itself as a safe and stable financial hub and awareness of its vulnerability as a small and open economy in a developing region reinforce its belief that more stringent regulation is appropriate for the country. Its rather unique situation whereby all locally incorporated banks are of domestic systemic importance provides further justifications for tougher prudential measures for its local banks. The business community sees the possibility of Basel III working to its advantage as Asian and local banks are better-equipped to meet Basel III requirements. However, similar to Hong Kong, bankers have raised concerns over the new liquidity rules. In addition, even though Singapore is a key financial derivatives trading hub and the first in Asia to offer central clearing services for financial derivatives, some have still raised doubts as to whether an Asian clearing house would be viable. Beyond Basel III, significant attention is placed on LTV policies and other property market restrictions, given the importance of real estate in the land scarce city-state. Officials also advocate effective supervision and strong corporate governance in addition to regulations as complementary forces to safeguard the stability of the banking system.

46

CHAPTER 4: THE BEGINNINGS OF AN ASIAN MONETARY FUND

The idea of an Asian Monetary Fund (AMF) was first conceived during the Asian Financial Crisis in 1997–19981. Mr Tharman Shanmugraratnam, Singapore’s Finance Minister recounted that the proposal “was in some ways a metaphor for Asia wanting to manage its own affairs”2. However, it was then promptly dismissed by the International Monetary Fund (IMF) and the US3.

Now, more than a decade on, with Asia’s circumstances vastly different from the darkest days of the Asian Financial Crisis, is the proposal for an AMF still being pursued? The first section of this chapter finds evidence suggesting that Asia continues to be interested in an AMF. The second section explores reasons behind Asia’s continued interest while the third section charts the concrete steps Asia has taken towards the establishment of an AMF. The fourth section further assesses the progress Asia has made towards the ultimate objectives of an AMF, that is financial and trade integration4. SECTION 1: IS THERE STILL INTEREST IN AN ASIAN MONETARY FUND?

In spite of the rejection by the IMF and the US, discussions on the possibilities of financial and monetary cooperation continued in Asia. In 2005, finance ministers and central bank governors from Asia as well as officials from the IMF and Asian Development Bank (ADB) met at a high-level seminar in Singapore to discuss “opportunities and challenges of Asian financial integration and ways to enhance regional surveillance and monetary cooperation” 5. A year later in 2006, this topic continued to be frequently mentioned in speeches and discussions during the Annual Meetings of the Boards of Governors of the IMF and the World Bank Group6. The Global Financial Crisis then followed. But interest in creating an AMF persisted through the crisis. In 2010, the ADB issued a report suggesting that the Chiang Mai Initiative Multilateralisation (CMIM) be developed into “a full-fledged Asian monetary fund” 7. Prominent commentators from different parts of Asia similarly urged a revisiting of the AMF. Thailand’s Supachai Panitchpakdi, a very well-respected economic expert and former director-general of the World Trade Organisation has been a supporter of the concept of an AMF since the Asian Financial Crisis. In 2010, the Bangkok Post reported that he still “hankers” for an AMF and that it is his “most cherished dream”8. Dr Pradumna Rana, associate professor at the Nanyang Technological University in Singapore, also called for “Asia [to] accelerate on-going efforts to establish an Asian Monetary Fund” by combining the CMIM with the newly created ASEAN+3 Macroeconomic Research Office (AMRO) 9 . Datuk Dr Mohamed Ariff, distinguished fellow of the Malaysian Institute of Economic Research, pointed out that it is time to “revisit the AMF concept” and that the AMF membership should be expanded to include India, Australia and New Zealand10.

Former IMF chief economist Simon Johnson observed that recent talks of a European Monetary Fund prompted by the Eurozone debt crisis would reignite interest in the creation of an AMF11.

47

SECTION 2: WHY ASIA IS INTERESTED IN AN ASIAN MONETARY FUND

A number of factors could explain why Asia continues to be interested in the establishment of an AMF. 1. A DIFFERENT ASIA TODAY Countries deeply affected by the Asian Financial Crisis “resolved never again to be so vulnerable” 12. Today’s Asia is stronger and better positioned to fulfil that resolution. Financial regulation and supervision have been strengthened, corporate governance has improved, countries’ financial positions are healthier13, capital controls are gradually being relaxed, exchange rates policies are more flexible and trade and investment have gathered speed14. 2. PERCEPTION OF IMF Bad memories from the Asian Financial Crisis Although Asia has since recovered strongly from the Asian Financial Crisis, many are still bitter about IMF’s policies then. In return for IMF’s loans during the Asian Financial Crisis, Asian governments had to reduce expenditure and increase interest rates which were seen by some as “needlessly deepen[ing] the turmoil” 15. Others felt that the reforms prescribed by IMF “failed to deal with the crisis” 16. Thailand’s Supachai Panitchpakdi concluded that “[the] IMF completely messed-up with the last Asian crisis” 17. The actions taken by Asia during the Global Financial Crisis are also telling. During the recent crisis, Asian countries rather borrow from others than the IMF. For instance, Indonesia secured standby loans from the ADB, World Bank, Australia and Japan and expanded currency swap arrangements with China and Japan18. Commentators also observed that the IMF’s readiness to assist European nations during the Global Financial Crisis is in sharp contrast to the harsh measures it imposed on Asia during the Asian Financial Crisis and this disparity in treatment did not go down well with Asia19. Rigidity of the IMF governance structure The IMF voting system is still seen as “heavily tilted in favour of the developed countries”20. The 4 largest Asian economies, including Japan, have only 13.8% of the votes, although Asia now holds about two-thirds of the world’s foreign reserves21. In the next 30 years, Asia is forecasted to generate the largest share of world GDP22. Although the plan is to increase Asia’s votes to 20% by 201223, there are doubts that the IMF would be able to evolve rapidly enough to reflect the changing balance of power in the global economy given the inflexibility of large organisations (IMF’s membership now stands at 187)24 and the belief that the IMF is “monopolize[d]” by Europeans25.

48

Hence, if Asia continues to be under-represented and the IMF does not adapt quickly enough, alternatives such as the AMF would become more appealing26. An AMF could be the key to give Asia a greater voice in international affairs27. 3. CHANGING OPENNESS TOWARDS AMF While the IMF quickly extinguished the idea of an AMF in 1997, the IMF today is opened to working with regional groupings under the “overarching role of the IMF”28 and has begun to establish links with the Chiang Mai Initiative (CMI)29. Dominique Strauss-Kahn, then IMF managing director, explained in early 2011 that it is better to have more resources to handle crises and thus regional initiatives are to be welcomed30. It is also unlikely that the US today could intervene effectively in the establishment of regional groupings in Asia, having lost “moral high ground” as the epicentre of the Global Financial Crisis31. SECTION 3: THE JOURNEY TOWARDS AN ASIAN MONETARY FUND

Asia has taken certain concrete steps, the key of which is the Chiang Mai Initiative (CMI) and its successors, which brings it closer to the establishment of an AMF. The evolution of the CMI is presented below. 1. CHIANG MAI INITIATIVE (CMI) In 2000, the CMI was conceived32. It was meant to be an arrangement whereby countries would swap small amounts of currencies33 to help members overcome problems relating to liquidity and exchange rate fluctuations in times of crisis34. In 2009, Finance Ministers from ASEAN (Association of South East Asian Nations, comprising Philippines, Indonesia, Malaysia, Thailand, Singapore, Myanmar, Cambodia, Vietnam, Laos and Brunei35), China, Japan and Korea (together ASEAN+3) agreed to implement the network of bilateral swap arrangements and to jointly contribute US$120billion36. What CMI symbolises The CMI was seen as the first concrete step towards the establishment of an AMF37 and the 2009 agreement a significant move forward in the CMI38. One journalist went as far as to say that the pool when ready would “neuter the IMF in Asia” 39. At its core, the CMI reflects that the IMF’s “tender ministrations during the 1997-1998 financial crisis have not been forgotten or forgiven”40. Others concur noting that the increase in contributions to US$120billion up from US$80billion shows Asia’s continued reluctance to seek IMF’s assistance in stress times41.

49

2. CHIANG MAI INITIATIVE MULTILATERALISATION (CMIM) In March 2010, the CMIM came into effect42. This meant that the bilateral swaps and credits would be pooled into a regional reserve43 which can be drawn on with one agreement44 based on a weighted voting system45. The CMIM aims to provide an efficient way for members to tap on the emergency liquidity pool 46 to fight currency speculation 47 and address balance of payment deficiencies48. Observers saw CMIM as a “major step toward the creation of an Asian monetary fund (AMF) that would be fully autonomous from the IMF”49. A journalist with the Straits Times in Singapore called the CMIM “an AMF by another name” 50. The agreement over the contribution amounts, where China (including Hong Kong) and Japan are the highest contributors at 32% each, also clears the path for further cooperation as it acknowledges China’s leadership position and puts to rest China’s long-standing concerns that it would be regarded

as “second fiddle” 51.

Credibility somewhat doubted However, the effectiveness of the CMI/CMIM was called into question during the Global Financial Crisis. Although a number of Asian countries were concerned about liquidity problems during the Global Financial Crisis, none of them tapped on the CMI swaps52. The Bank of Korea, for instance, approached the US Federal Reserve to negotiate a currency swap instead of the ASEAN+353 while Singapore turned to US and Japan54. The New Straits Times in Malaysia attributed the reluctance to tap on the CMIM to the CMIM’s continued link to the IMF55. As the CMIM does not have the capability to oversee lending56, it requires countries to enter into a stand-by agreement with the IMF before countries are allowed to access the bulk of the emergency funds in the CMIM pool57. As Professor Eichengreen wrote in a column for Taipei Times, this requirement “nullif[ies] the very purpose of the arrangement, which is to free Asia from the IMF”58. Understandably though, countries would want the assurance that the monies they lent could be repaid59. Hence, unless countries are prepared to take up the role that the IMF played i.e. to make harsh reviews of their neighbours’ policies and demand reforms and risk driving up political sensitivities to a new high, it is difficult to eliminate the link to IMF60. 3. ASEAN+3 MACROECONOMIC RESEARCH OFFICE (AMRO) The establishment of the AMRO in May 201161 could potentially plug the gap and assume the surveillance role in Asia. AMRO’s Mandate Surveillance The AMRO was created to conduct surveillance and due diligence62 and provide the assurance that the CMIM fund would not “merely be an outlet for easy money”, keeping moral hazard in check63. The AMRO, which is based in Singapore64, is expected to monitor regional economies, serve as an “early detection of risks” 65 and “set [the] multilateral currency swap framework in motion” upon the

50

identification of risks66. When a country requests to tap on the funds, the AMRO would also recommend the amount of funds to be withdrawn67. Advisory The ASEAN+3 Finance Ministers have directed that in the longer term the new outfit should “expand its role in the direction of an Asian Monetary Fund by providing guidance on economic and fiscal policies to countries in the region”68. Independence from the IMF Commentators also see the omission of IMF in the operational guidelines for AMRO as indications of Asia wanting to establish independence from the IMF, which reflects the deeper resentment that Asia still holds towards the measures imposed upon them by the IMF during the Asian Financial Crisis69. An ASEAN source clarified that while the IMF may be approached for data and information, the AMRO is “not dependent on the IMF” and this would instil greater confidence in the region as Asia would have shown that it has the means to be independent70. However, in the short-term, in AMRO’s founding years, it is foreseeable that AMRO would need to work with the IMF to gain experience in surveillance, before gradually gaining independence71. Reaction towards AMRO: A very significant milestone Newspapers in different parts of Asia saw the establishment of AMRO as critical in the creation of an AMF.

Japan’s Kyodo News: “Hopes are high that the ASEAN-plus-three Macroeconomic Research Office… will become an Asian version of the IMF” 72.

Singapore’s Business Times: “With a strong AMRO, CMIM could very soon discontinue its current linkage with IMF programmes and emerge as a functioning Asian Monetary Fund (AMF)” 73.

Indonesia’s Jakarta Post: “On one level, the role of AMRO is like that of the IMF”74.

Korea’s The Korea Herald: “The setting up of Amro is a critical step toward the establishment of AMF” 75.

Thailand’s Thai News Service: “The AMRO office … will eventually diminish - if all goes according to plan - the CMIM's current dependence on the IMF for its surveillance needs”76.

Dr Rana from the Nanyang Technological University in Singapore conducted an opinion poll among government officials, academics and bankers in ASEAN+3 and found similar positive sentiments77:

About two-thirds of the respondents felt that “the decision to set up Amro was significant and that it would enhance the use of CMIM”.

Two-thirds of the respondents also believe “the CMIM and Amro should be merged in the future to set up the AMF” and “the AMF should complement the IMF and not try to supplant it”.

51

To others, the AMF is nearly formed, except not in name. In ADB’s head of regional economic integration Iwan Aziz’s words78: ''The day AMRO is in operation, to me the Asian Monetary Fund is born” “Tell me if this is not the IMF...It's exactly what the IMF doing...but we don't want to call it the AMF because you will be competing with the IMF.'' AMRO Challenges However, as a new office, the AMRO is not without challenges. The foremost would be to establish credibility, to show that it is ready to highlight and criticize policies, withstand political pressures, maintain independence79 and be decisive and firm when deciding if a country should be allowed to tap on CMIM funds80. This is indeed a tall order for a new office “on a shoestring budget and a skeleton staff” 81. Already, there are concerns that the AMRO could become “a failure if undermanned and underfunded” 82. 4. THE NEXT GENERATION OF CMIM? Japan has suggested that the size of the CMIM pool be increased beyond the current US$120billion and that a “crisis-pre-empting credit line” which countries could draw on before a crisis actually sets in could be introduced83. The ADB supports such a proposal84. It is believed that if such a credit line had existed, Korea could have tap on the facility instead of turning to the US Federal Reserve for a swap line during the Global Financial Crisis85. 5. DE FACTO MONETARY COOPERATION Apart from the CMI, CMIM and AMRO initiatives, Asia’s monetary policies are also converging although not through deliberate efforts. Most Asian currencies are now largely on managed float regimes86. Central banks in the ASEAN are also focused on inflation targeting87. For instance, Malaysia and Thailand raised interest rates several times in 2010 while Singapore allowed the Singapore dollar to appreciate to reduce import inflationary pressures88. Countries are also pro-actively guarding against asset bubbles. Thailand imposed withholding taxes on foreign investors’ holdings of Thai bonds while Singapore introduced property market restrictions to discourage speculation89. Although there are no explicit coordination efforts, Singapore’s Finance Minister, Tharman Shanmugraratnam, opined that such de facto monetary coordination is the “best way to go” because it allows countries to respond to their own circumstances and for exchange rates to reflect differing economic paths which are particularly relevant as Asia is in a stage of growth and reforms90. This approach also avoids the issue of lack of ownership associated with coordinated efforts91. 6. HOW FAR ARE WE FROM AN AMF? Although the AMRO is established, time is needed for it to be fully operational, as it needs to clarify its legal status and build up competencies for effective independent surveillance92.

52

Other challenges could also derail the journey towards an AMF. The relative smooth economic progression in Asia in the absence of an AMF could reduce the impetus to establish an AMF93. Further, “political differences” in Asia cannot be ignored94. In Dr Rana’s survey, he found that95

Only 10% of respondents felt that an AMF can be established in the next 5 years;

About 50% believe that an AMF can be established between 2016 and 2020; and

Nearly one third believe that an AMF can only happen after 2020. This suggests that while Asia is on its path towards the creation of an AMF, time is needed before one can realistically be established. SECTION 4: ASIA’S PROGRESS TO TRADE AND FINANCIAL INTEGRATION

As the ultimate purpose of an AMF is to facilitate trade and financial integration96, this section summarises Asia’s progress on these 2 fronts. 1. REGIONAL TRADE

Intra-regional trade within Asia is high with intra-regional exports making up about 50% of total Asian exports as of 2006, comparable to countries in the North America Free Trade Agreement (NAFTA) 97.

Trade within Asia is expected to continue to grow given the following: (a) Expected increase in foreign direct investment (FDI) flows within Asia. As Japan’s economy

gradually recovers and Chinese and Indian firms look for new markets and new production sites, various parts in Asia, not just China and India, can expect an increase in inflow of FDI from within Asia98.

(b) The growing middle class in Asia would also mean an increase in demand for goods which would prompt Asia’s production lines to be re-aligned to meet rising demand from Asia in addition to producing for the West99.

(c) The increase in Free Trade Agreements (FTA) within Asia would further reduce trade barriers100. 99.7% of goods within the ASEAN-6 countries are already tariff-free101. Bilateral agreements are also evolving into regional and inter-regional agreements102. For example, the ASEAN has signed a number of FTA with major economies like China, Japan, India and Korea103.

While the differing stages of development within Asia are often thought to be a challenge for trade integration, it could become a source of comparative advantage as the diversity offers a range of factors of productions at different prices, potentially making up an efficient production chain104.

53

2. FINANCIAL INTEGRATION Asia, however, does not score as well on financial integration. With the exception of Japan, Asian bond markets are not developed while the turnover in equity markets are still lower than those in the US and Europe105. Hence, Asian savings are still largely invested in markets outside Asia, with only 18% of Asia’s foreign investments invested within Asia106. However, there are several plans to develop capital markets. For instance, a number of exchanges in ASEAN are working towards creating an electronic trading link to connect markets to enable cross-border trading107. The ASEAN has also introduced a common set of disclosure standards for listing so that issuers would only need to comply with one set of standards plus a supplementary set of country-specific requirements108.

To further encourage cross-border flows, Asia would also need to consider easing capital controls and deciding how to manage the trade-off between greater liquidity and increased volatility that come with free capital movements109. SECTION 5: SUMMARY AND CONCLUSIONS

Although the idea of setting up an AMF was quickly dismissed by the IMF and US during the Asian Financial Crisis, Asia clearly has not given up on the proposal. Gradual steps are taken towards the establishment of an AMF but time is needed for Asia to build up the requisite capability and infrastructure. While the journey would be a long one, what is evident is that progress has been made and the desire to create an AMF-like institution remains strong.

54

CONCLUDING REMARKS

Basel III was primarily designed to address problems of the West. Asian voices were underrepresented in decision-making forums and thus the extent to which Asia has bought into Basel III cannot be assumed. Judging from the responses from China, Hong Kong and Singapore, however, countries in Asia support the adoption of Basel III albeit individually for slightly different reasons. While all could see the conceptual merit of Basel III, other reasons further motivate the countries to adopt Basel III. In the case of China, the imposition of tougher measures comes at the right time as credit growth in the country is accelerating and it needs to introduce more stringent measures to counter the cycle. Hong Kong, as an international financial centre, sees it necessary to adopt international standards and contribute to the resilience of the wider banking sector. Its interest in Basel III also stems from its awareness that Asia is not decoupled from Western economies and if Basel III is to affect the Western banking system, Asia ought to pay attention. Singapore continued its approach of imposing higher regulatory requirements than international norms and sees the ability to meet and even exceed international standards as testimony of its status as a safe and stable financial hub. The banking communities in the 3 jurisdictions, being better-positioned to meet Basel III than their Western counterparts, now see that they have a competitive advantage as they would be less restrained in their activities, be it in lending or dividend payouts, compared to American and European banks which may have to pare down in order to meet Basel III standards. However, different circumstances in Asia also mean that meeting certain Basel III requirements are less practical. Some Asia-Pacific economies, for example, Hong Kong and Singapore, do not issue sufficient local government bonds, making it difficult and costly for banks to meet liquidity standards. The commercial viability of moving OTC derivatives to Asian central clearing houses is also questionable given the much lower volume of derivatives in Asia. Beyond Basel III, the 3 jurisdictions have focused rather extensively on controlling credit particularly in the property markets. This is well-founded as Asia is especially vulnerable to property asset bubbles because investors tend to assume that property prices in growing economies can only go up. What emerges from the analysis of the responses of the 3 jurisdictions is that Asia differs from the West in various aspects and a natural evolution would be for Asia to find its own solutions in the future instead of adopting standards which are still largely determined by Western powers. Signs of that are already developing. ASEAN+3 countries have jointly contributed towards a US$120billion pool which troubled countries could tap on in times of need. Most recently, an office tasked with surveillance and due diligence responsibilities has been created. Countries intend for this office to eventually be able to provide advice on economic and fiscal issues for the region, drawing Asia yet another step closer to the establishment of an Asian Monetary Fund. However, it would be premature to say that Asia would achieve the ultimate goal of managing its own economic affairs soon. Time is needed to build up the competencies and infrastructure. But the direction towards which Asia is heading is clear.

55

APPENDIX:

INNOVATION & LIBERALIZATION – VIEWS OF THE 3 JURISDICTIONS

In researching for the 3 jurisdictions’ responses to Basel III, their approaches to regulation,

innovation and liberalisation become more apparent. The frequent references officials in each of these jurisdictions make to innovation in their speeches is testament of the critical role innovation had played in the recent Global Financial Crisis and also of how innovation will likely continue to characterise the future financial landscape. This appendix aims to present the 3 jurisdictions’ varying views to regulation, innovation and liberalisation. SECTION 1: CHINA: PACE OF INNOVATION AND LIBERALISATION SHOULD BE CONTROLLED

The CBRC states rather explicitly that it adopts an ideologically different approach from the West. In CBRC Chairman Liu Mingkang’s words, “the western regulatory authorities are too obsessed with innovation and market force”1. He cited the originate-and-distribute model as an example of innovation gone wrong and urged Chinese banks to go back to basics and traditional business lines such as deposits, loans, remittances, credit cards and cross-border settlements2. The CBRC also views complexity as a key reason why risk was mis-priced and thus mis-managed3. The preference for simplicity is extended to prudential measures. CBRC Chairman Liu recalled a time in the past before financial regulation liberalisation took place when developed markets used simple but effective prudential limits: “We have been sticking to a set of simple, useful and effective ratios, limits and targets, modelling those used by some developed markets in the past and were later abandoned by themselves during the frenzy innovation and deregulation. For example, apart from the CAR ratio, we emphasized the quality first and required a simple structure of the capital, with common equity and retained earnings occupying no less than 75% of Tier-1 capital, much higher than the 25% in some developed markets.”4 Given the Chinese’s cautious stance towards innovation, liberalisation of the banking industry is carefully paced. For example, in 2008 when authorities first allowed Chinese banks to provide Merger & Acquisition (M&A) funding, the CBRC required banks to comply with several ratios and limits5. CBRC explained that such ratios and limits are necessary as it is not prudent for the risky M&A market to grow exponentially. Instead, it believes a phased-in approach would minimize unnecessary credit losses6. RESPONSE TO CHINA’S INNOVATION AND LIBERALISATION APPROACH Martin Wheatley, former chief of Hong Kong Securities and Futures Commission, opined that such an “intrusive” and “prescriptive” style of regulation has the advantage of preventing new products from entering the market and that could avoid undue risk-taking and undue leverage7. But doing so

56

would also introduce moral hazard as products that are allowed to be distributed would be viewed as being endorsed by authorities as safe8. The local business community points out the need to strike a balance. As the President of China Merchants Bank puts it, “while [Chinese banks] must avoid repeating [the] mistakes [of recent Western policies that led to the financial crisis] at all cost, we should not be excessively fearful as well. The key is to promote an optimal balance between innovation and risk”9. All in all, local bankers endorsed the Chinese regulators’ conservative stance, giving prudent regulatory policies relating to financial and banking innovation and restraints on high-risk ventures the highest score in the Chinese Bankers Survey Report for 201010. SECTION 2: HONG KONG: TO REMAIN CAUTIOUS

Hong Kong regulators share a similar view as their mainland counterparts in attributing the mis-use of innovation for “short-term private gain at the expense of longer-term stability” as a key reason for the Global Financial Crisis11. The HKMA further acknowledges that “bankers and traders are miles ahead of the regulators and supervisors when it comes to financial engineering and innovations”, but such innovation do not necessarily translate to better risk management and financial stability as the crisis has shown12.

Hence, it believes that the HKMA “must continue with its long standing conservative supervisory approach with even greater emphasis on prudence”13. The HKMA rather adopts a gradualism attitude, taking more time when needed, even if it falls short of what businesses would have liked14. Joseph Yam, then chief executive of HKMA clarified that this approach does not mean going “back to basics”, if it means reverting to banking services of the past, is the solution15. Instead, he called on the industry to reflect on the real function of banking which is to provide financial intermediation to support the real economy, and not one that focuses on inventing complicated ways to make quick gains16. Goodstadt, a former top policy adviser to Hong Kong’s British colonial administration, analysed why Hong Kong has always taken a conservative stance17. The massive bank failures and financial scandals before the mid-1980s remain stark reminders to the general public and regulators that banks cannot be trusted18. This lower level of trust helped pushed through regulatory reforms19 and sustained tight regulation. In later times, the uncertainty surrounding the 1997 handover from British to Chinese rule again justified the need for strict regulation20. In short, history has taught Hong Kong that it needs to remain conservative. SECTION 3: SINGAPORE: REGULATION AND INNOVATION SHOULD CO-EXIST

Singapore’s diagnosis of the cause of the financial crisis is slightly different. It does not view financial innovation in derivative products as the reason for the crisis but rather points to “failures in macroeconomic policies and financial supervision” in the form of overly lax monetary policies and the inability to detect and correct leverage build-up in the financial system as causes of the crisis21. But it agrees that complex financial products “obscured the risks in sub-prime lending and transmitted these risks across the financial sector” 22.

57

It believes that since innovation is not the cause of the crisis, “regulation should therefore not restrict financial innovation”23. Instead, regulations should correct market imperfections and “create conditions …that promote effective risk management” 24. Hence, the lesson to be drawn from the crisis is “not... more regulation and less markets” but rather “better regulation [and] better functioning markets”25. Ravi Menon, MAS’ Managing Director, illustrated the application of this approach using the securitisation market. He suggested that since securitisation obscured risks, disclosure standards should be improved to help investors better understand the risks of the product; to encourage market discipline, a possible solution is to require originators to retain portions of each issue so that their incentives are aligned to those of the investors; and finally, any residual risks could be covered by additional capital requirements26. In sum, in Singapore’s views, the market should be allowed to innovate and regulations should focus on making markets “work better” through a mixture of rules and incentives to encourage better risk management27.

REFERENCES

Introduction 1 Kalinowski, T. (2011) East Asia in the Global Governance of Finance. In Global Financial Stability: A Dialogue on Regulation and Cooperation. Selected Expert Papers from the Dialogue Forums 2010. Available at: http://ssrn.com/abstract=1907850 (Accessed: 23 August 2011). 2 Ibid. 3 Edelmann, C. (2011) ‘Asian banks ‘breeze through’ Basel III implementation’, Asian Banking & Finance. 2 August [Online]. Available at: http://asianbankingandfinance.net/investment-banking/commentary/asian-banks-%E2%80%98breeze-through%E2%80%99-basel-iii-implementation (Accessed: 5 August 2011). 4 Chopra, A. (2011) ‘Basel III overlooks Asian banks’, The Philippine Star. 4 January [Online]. Available at: http://www.philstar.com/Article.aspx?articleId=644944&publicationSubCategoryId=74 (Accessed: 5 August 2011). 5 Ku, D. and Armstrong, R. (2010) ‘Asia regulators say G20 reform driven by U.S., Europe’, Reuters 29 November [Online]. Available at: http://blogs.reuters.com/financial-regulatory-forum/tag/basel-iii/ (Accessed: 14 July 2011). 6 Davies, H. (2011) ‘Chinese Finance Comes of Age’, Caijing Magazine. 4 July [Online]. Available at: http://english.caijing.com.cn/2011-07-04/110764701.html (Accessed: 22 August 2011). Chapter 1: China 1 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at:

58

http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 2 Topping, S. (2011) ‘Understanding China’s eager embrace of Basel III’, The Asian Banker, 8 June. Available at: http://www.theasianbanker.com/research-notes/7175 (Accessed: 3 August 2011). 3 KPMG (2010) Evolving Banking Regulation: A marathon or a sprint? November. Available at:

http://www.kpmg.com/cn/en/IssuesAndInsights/ArticlesPublications/Documents/Evolving-Banking-

Regulation-O-201011.pdf (Accessed: 19 July 2011).

4 Wang, X. (2010) ‘Moody’s: Chinese lenders still a good bet’, China Daily. 16 December [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 22 August 2011). 5 Topping, S. (2011) ‘Understanding China’s eager embrace of Basel III’, The Asian Banker, 8 June. Available at: http://www.theasianbanker.com/research-notes/7175 (Accessed: 3 August 2011). 6 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 7 Mangat, J. (2010) ‘Asian banks win important Basel III victory but have little to fear’, Asia Risk. 4 August [Online]. Available at: http://www.risk.net/asia-risk/feature/1726142/asia-banks-influencing-basel-iii-rule-changes-little-fear (Accessed: 24 August 2011). 8Ibid. 9 McMahon, D. (2010) ‘World News: Asia: China proposes global finance pact --- In a rare international appeal, bank regulator calls for a treaty to guard against the failure of major lenders’, The Wall Street Journal Asia. 11 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 10 Ibid. 11 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 12 PricewaterhouseCoopers and China Banking Association (2010) ‘Chinese Bankers Survey 2010 Executive Summary Oct 2010’, PricewaterhouseCoopers China [Online]. Available at: http://www.pwccn.com/webmedia/doc/634236143659676657_bcm_cn_bankers_survey_oct2010.pdf (Accessed: 19 July 2011). 13 Forchielli, A. and Pagliarini, A. (2010) ‘Basel III: Implications for China Banks and Financial System’, Caixin Online. 30 November [Online]. Available at: http://blog.english.caing.com/article/126/ (Accessed: 5 August 2011).

59

14 Ibid. 15石镜泉[Shi, K.C.] (2011) ‘2011 年内银改革之年’ [2011: A year of reforms for Chinese mainland banks], Hong Kong Economic Times. 12 January [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 25 August 2011). 16 Shanghai Securities News (2011) ‘Financial insiders debate over regulation and innovation’, Shanghai Securities News. 22 August [Online]. Available at: http://english.cnstock.com/enghome/engtopnews/201108/1497210.htm (Accessed: 22 August 2011). 17 Ibid. 18 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 19 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 20 Ibid. 21 Ibid. 22 Ibid. 23 Ibid. 24 Ibid. 25 Pao, J. (2011) ‘CBRC starts public consultation on new capital adequate ratios’, Hong Kong Economic Journal. 15 August [Online]. Available at: http://www.ejinsight.com/template/eng/news/jsp/detail.jsp?dnews_id=277&title_id=18904 (Accessed: 25 August 2011). 26 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 27 Ibid. 28 Ma, W. (2011) ‘A Transitional Period in the Banking Sector’, Caijing Magazine. 26 January [Online]. Available at: http://english.caijing.com.cn/2011-01-26/110628804.html (Accessed: 18 July 2011).

60

29 21st Century Business Herald (2010) ‘Regulators Discussing Stricter Chinese Version of Basel III Requirements’, 21st Century Business Herald. 15 September [Online]. Available at: http://en.21cbh.com/HTML/2010-9-15/Basel-Capital.html (Accessed: 18 July 2011). 30 Cai, J. (2010) ‘Skills, not Basel rules, the issue for banks: Competitive edge still lacking, adviser says’, South China Morning Post. 16 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 31 Forchielli, A. and Pagliarini, A. (2010) ‘Basel III: Implications for China Banks and Financial System’, Caixin Online. 30 November [Online]. Available at: http://blog.english.caing.com/article/126/ (Accessed: 5 August 2011). 32 Cai, J. (2010) ‘Skills, not Basel rules, the issue for banks: Competitive edge still lacking, adviser says’, South China Morning Post. 16 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 33Ibid. 34 Ibid. 35 Wang, X. (2011) ‘Stricter bank rules will take effect in early 2012: CBRC’, China Daily. 4 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 22 August 2011). 36 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 37 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 38 Wang, H. (2010) Speech by the CBRC Vice Chairman WANG Huaqing [Speech at 2010 Lujiazui Forum]. 26 June. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201007210339137CBE126B75FFDDE305CD598400 (Accessed: 17 July 2011). 39 Liu, M. (2008) Addressing Challenges and Promoting Innovation: The Role of Regulators [Speech at the Caijing Magazine Annual Meeting] . 13 December. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=200812231AEA0DDAE8588812FF832957DA434400 (Accessed: 18 July 2011). 40 PricewaterhouseCoopers and China Banking Association (2010) ‘Chinese Bankers Survey 2010 Executive Summary Oct 2010’, PricewaterhouseCoopers China [Online]. Available at: http://www.pwccn.com/webmedia/doc/634236143659676657_bcm_cn_bankers_survey_oct2010.pdf (Accessed: 19 July 2011). 41 Warden, G. (2011) ‘Corporate: Beijing and banks to bear brunt of China’s debt crisis’, The Edge Malaysia (Weekly), 4 July [Online]. Available at: http://global.factiva.com/ (Accessed: 18 July 2011).

61

42 Bank for International Settlements (2010) Guidance for national authorities operating the countercyclical capital buffer. Bank of International Settlements (December). Available at http://www.bis.org/publ/bcbs187.pdf (Accessed: 19 July 2011) 43 Bank for International Settlements (2011) Measures for global systemically important banks agreed by the Group of Governors and Heads of Supervision. Bank of International Settlements (25 June). Available at http://www.bis.org/press/p110625.htm (Accessed: 26 June 2011). 44 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 45 Liu, M. (2010) Six Things that Make Us Concern [Keynote speech at the 16th International Conference on Banking Supervision in Singapore] 23rd September. Available at http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201010120E599F9AB245D490FF5BE7AD5A279B00. (Accessed: 17 July 2011). 46 Ibid. 47 Ibid. 48 Liu, M. (2009) Chairman LIU Mingkang’s speech [Speech at 2009 Lujiazui Forum]. 15 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=2009071386EA61D21A184819FF6EE52A4EDA1200 (Accessed: 18 July 2011). 49 Ibid. 50 Liu, M. (2010) Six Things that Make Us Concern [Keynote speech at the 16th International Conference on Banking Supervision in Singapore] 23rd September. Available at http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201010120E599F9AB245D490FF5BE7AD5A279B00. (Accessed: 17 July 2011). 51 Lai, E. (2011) ‘China banking regulator again urges more risk controls on property sector loans’, Hong Kong Economic Journal. 9 May [Online]. Available at: http://www.ejinsight.com/template/eng/news/jsp/detail.jsp?dnews_id=192&title_id=12393 (Accessed: 5 August 2011). 52 http://www.ljzfc.org/website/en_Class.asp?ID=75&isone=1 (Accessed: 30 August 2011). 53 Caijing Magazine (2011) ‘"Too-Big-to-Fail" Banks in China Faces CNY400-500B ln Capital Gap in 5 Years: Wu Xiaoling’, Caijing Magazine. 22 August [Online]. Available at: http://english.caijing.com.cn/2011-08-22/110821449.html (Accessed: 22 August 2011). 54 Chen, L. (2011) ‘Bank stocks tumble after warning about asset gap’, South China Morning Post. 23 August [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 24 August 2011).

62

55 Wang, X. (2011) ‘CBRC to set new rules for banking sector’, China Daily. 23 February [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 22 August 2011). 56 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 57 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Rules for the Leverage Ratio Management of Commercial Banks (Draft for Soliciting Comments). 20 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613590FC538C4548AFFFF38C8F363797C00 (Accessed: 14 July 2011). 58 Ibid. 59 Ibid. 60 Ibid. 61 Liu, M. (2008) Addressing Challenges and Promoting Innovation: The Role of Regulators [Speech at the Caijing Magazine Annual Meeting] . 13 December. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=200812231AEA0DDAE8588812FF832957DA434400 (Accessed: 18 July 2011). 62 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Rules for the Leverage Ratio Management of Commercial Banks (Draft for Soliciting Comments). 20 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613590FC538C4548AFFFF38C8F363797C00 (Accessed: 14 July 2011). 63 Ibid. 64 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 65 PricewaterhouseCoopers and China Banking Association (2010) ‘Chinese Bankers Survey 2010 Executive Summary Oct 2010’, PricewaterhouseCoopers China [Online]. Available at: http://www.pwccn.com/webmedia/doc/634236143659676657_bcm_cn_bankers_survey_oct2010.pdf (Accessed: 19 July 2011). 66 Wang, X. (2011) ‘CBRC to set new rules for banking sector’, China Daily. 23 February [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 22 August 2011). 67 Ibid.

63

68 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 69 Basel Committee on Banking Supervision (2010) Basel III: International framework for liquidity risk measurement, standards and monitoring. Bank for International Settlements (December 2010). Available at http://www.bis.org/publ/bcbs188.pdf (Accessed: 7 August 2011). 70 Ibid. 71 Mangat, J. (2010) ‘Asian banks win important Basel III victory but have little to fear’, Asia Risk. 4 August [Online]. Available at: http://www.risk.net/asia-risk/feature/1726142/asia-banks-influencing-basel-iii-rule-changes-little-fear (Accessed: 24 August 2011). 72 Ibid. 73 Reuters (2011) ‘HIGHLIGHTS – China drafts new rules on bank capital requirements’, Reuters. 25 February [Online]. Available at: http://www.reuters.com/article/2011/02/25/china-economy-banking-idUSTOE71O05U20110225 (Accessed: 14 July 2011). 74 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 75 Ibid. 76 Ibid. 77 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC held the second economic and financial situation briefing of 2011. 19 April. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201105099ECC7D9C5D69E048FF3AD17FAF301700 (Accessed: 14 July 2011). 78 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 79 People’s Republic of China. China Banking Regulatory Commission (2009) Guideline on Liquidity Risk Management of Commercial Banks. 29 October. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=200911161A02DF6ACF9A64F1FF37E38D9EFBDA00 (Accessed: 18 July 2011). 80 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC respond to questions of the press relating to the Guiding Opinions on the Implementation of New Regulatory Standards in China’s Banking Industry. 3 May. Available at:

64

http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20110613FCE47ABD05FA4204FF5BCBC854991A00 (Accessed: 14 July 2011). 81 Ibid. 82 South China Morning Post (2011) ‘New capital rules may not spare mainland banks debt crisis’, South China Morning Post. 10 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 83 Ibid. 84 Lee, G. (2011) ‘New loan-loss reserve requirement under Basel III set to crimp profits at Chinese banks’, AsiaRisk, 17 May[Online]. Available at: http://www.risk.net/asia-risk/news/2070645/loan-loss-reserve-requirement-basel-iii-set-crimp-profits-chinese-banks (Accessed: 18 July 2011). 85 South China Morning Post (2011) ‘New capital rules may not spare mainland banks debt crisis’, South China Morning Post. 10 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 86 Ibid. 87 Ibid. 88 Ibid. 89Ibid. 90 Caijing Magazine (2011) ‘Xu Xiaonian: Local Gov. may Consider Selling State Assets to Repay Debts’, Caijing Magazine. 22 August [Online]. Available at: http://english.caijing.com.cn/2011-08-22/110820921.html (Accessed: 22 August 2011). 91 Shanghai Securities News (2011) ‘Local govt loan risks ‘under control’: CBRC’, Shanghai Securities News, 18 August [Online]. Available at: http://english.cnstock.com/engopinion/opnheadline/201108/1490494.htm (Accessed: 18 August 2011). 92 Caijing Magazine (2011) ‘Xu Xiaonian: Local Gov. may Consider Selling State Assets to Repay Debts’, Caijing Magazine. 22 August [Online]. Available at: http://english.caijing.com.cn/2011-08-22/110820921.html (Accessed: 22 August 2011). 93 Liu, M. (2010) Chinese Bankers Carry Hopes for Future Balances. [Keynote speech at Asian Financial Forum in Hong Kong SAR] 20 January. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=2010012011DA7AE6925E5D48FF76107FF744C800 (Accessed: 14 July 2011). 94 Lee, G. (2011) ‘New loan-loss reserve requirement under Basel III set to crimp profits at Chinese banks’, AsiaRisk, 17 May[Online]. Available at: http://www.risk.net/asia-risk/news/2070645/loan-loss-reserve-requirement-basel-iii-set-crimp-profits-chinese-banks (Accessed: 18 July 2011).

65

95 Ma, W. (2011) ‘A Transitional Period in the Banking Sector’, Caijing Magazine. 26 January [Online]. Available at: http://english.caijing.com.cn/2011-01-26/110628804.html (Accessed: 18 July 2011). 96 Wang, X. (2011) ‘Stricter bank rules will take effect in early 2012: CBRC’, China Daily. 4 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 22 August 2011). 97 Ma, W. (2011) ‘A Transitional Period in the Banking Sector’, Caijing Magazine. 26 January [Online]. Available at: http://english.caijing.com.cn/2011-01-26/110628804.html (Accessed: 18 July 2011). 98 Wang, H. (2010) Speech by the CBRC Vice Chairman WANG Huaqing [Speech at 2010 Lujiazui Forum]. 26 June. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201007210339137CBE126B75FFDDE305CD598400 (Accessed: 17 July 2011). 99 Liu, M. (2010) Chinese Bankers Carry Hopes for Future Balances. [Keynote speech at Asian Financial Forum in Hong Kong SAR] 20 January. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=2010012011DA7AE6925E5D48FF76107FF744C800 (Accessed: 14 July 2011). 100 Shanghai Securities News (2011) ‘China curbs on realty speculation long-term policy: Expert’, Shanghai Securities News, 2 June [Online]. Available at: http://english.cnstock.com/realestate/renewrele/201106/1336410.htm (Accessed: 18 July 2011). 101 Chung, V. (2011) ‘Ways to beat home purchase restrictions’, Hong Kong Economic Journal . 26 April [Online]. Available at: http://www.ejinsight.com/template/eng/guest/jsp/detail.jsp?dnews_id=183&title_id=11621&author_id= (Accessed: 5 August 2011). 102 Ibid. 103 Qiang, X. (2011) ‘Beijing pilots housing price restrictions’, Shanghai Securities News. 5 August [Online]. Available at: http://english.cnstock.com/realestate/respecial/201108/1463034.htm (Accessed: 22 August 2011). 104 Shanghai Securities News (2011) ‘China curbs on realty speculation long-term policy: Expert’, Shanghai Securities News, 2 June [Online]. Available at: http://english.cnstock.com/realestate/renewrele/201106/1336410.htm (Accessed: 18 July 2011). 105 Shanghai Securities News (2011) ‘China’s property developers under pressure’, Shanghai Securities News. 12 August [Online]. Available at: http://english.cnstock.com/realestate/retopnews/201108/1478814.htm (Accessed: 22 August 2011). 106 Tang. Z. (2011) ‘Property tightening measures to spread to smaller cities’, Shanghai Securities News. 18 August [Online]. Available at: http://english.cnstock.com/enghome/homerealestate/201108/1490714.htm (Accessed: 22 August 2011). 107 Shanghai Securities News (2011) ‘China’s property developers under pressure’, Shanghai Securities News. 12 August [Online]. Available at:

66

http://english.cnstock.com/realestate/retopnews/201108/1478814.htm (Accessed: 22 August 2011). 108 Chung, V. (2011) ‘Ways to beat home purchase restrictions’, Hong Kong Economic Journal . 26 April [Online]. Available at: http://www.ejinsight.com/template/eng/guest/jsp/detail.jsp?dnews_id=183&title_id=11621&author_id= (Accessed: 5 August 2011). 109 Ibid. 110 Tang. Z. (2011) ‘Property tightening measures to spread to smaller cities’, Shanghai Securities News. 18 August [Online]. Available at: http://english.cnstock.com/enghome/homerealestate/201108/1490714.htm (Accessed: 22 August 2011). 111 An, Y. and Wang, J. (2011) ‘PBOC Raises Reserve Requirement Ratio’, Caijing Magazine. 14 June [Online]. Available at http://english.caing.com/2011-06-14/100269277.html (Accessed: 3 August 2011). 112 21st Century Business Herald (2011) ‘China Sets Higher Capital Adequacy Requirement for Smaller Lenders’, 21st Century Business Herald. 4 May [Online]. Available at: http://en.21cbh.com/HTML/2011-5-4/CAR-Banking.html (Accessed: 18 July 2011). 113 Ruan, V. and Back, A. (2011) ‘China eager to curtail banking risks’, The Wall Street Journal Asia. 6 January [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 114 China Daily (2010) ‘China's new credit rules put brakes on banks' lending binge’, China Daily. 22 February [Online]. Available at: http://www.chinadaily.com.cn/bizchina/2010-02/22/content_9483963.htm (Accessed: 19 July 2011). 115 Chung, V. (2011) ‘China banks need money’, Hong Kong Economic Journal. 12 April [Online]. http://www.ejinsight.com/template/eng/guest/jsp/detail.jsp?dnews_id=173&title_id=10710&author_id=7 (Accessed: 5 August 2011). 116 Yue, B. (2011) ‘Chinese cities raise property down payments’, Shanghai Securities News. 7 July [Online]. Available at: http://english.cnstock.com/realestate/renewrele/201107/1400111.htm (Accessed: 18 July 2011). 117 Chung, V. (2011) ‘China banks need money’, Hong Kong Economic Journal. 12 April [Online]. http://www.ejinsight.com/template/eng/guest/jsp/detail.jsp?dnews_id=173&title_id=10710&author_id=7 (Accessed: 5 August 2011). 118 Ibid. 119 Wei, T. (2011) ‘Policies may be eased to ride out turmoil’, Shanghai Securities News. 12 August [Online]. Available at: http://english.cnstock.com/enganalysis/anapolicy/201108/1478772.htm (Accessed: 22 August 2011). 120 Chung, V. (2011) ‘China banks need money’, Hong Kong Economic Journal. 12 April [Online].

67

http://www.ejinsight.com/template/eng/guest/jsp/detail.jsp?dnews_id=173&title_id=10710&author_id=7 (Accessed: 5 August 2011). 121 Liu, M. (2009) Liu Mingkang stresses reasonable control of credit supply, strong risk management and steady banking operation [Speech at 4th meeting of CBRC on analyzing and reporting economic and financial situation in 2009]. 21 October. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=2009103024ADBDF8CFB1779BFF1629B2E80D9700 (Accessed: 17 July 2011). 122 People’s Republic of China. China Banking Regulatory Commission (2009) CBRC Issued Plans to Implement “Three Measures and One Guideline” for Loan Management. 11 December. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=200912189EDF1BF62C099909FF5592B3BFC9AB00 (Accessed: 19 July 2011). 123 People’s Republic of China. China Banking Regulatory Commission (2009) The CBRC issued three specific requirements for prudential credit risk management by commercial banks till year-end. 23 November. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20091126745230A8D7DA0195FF6466B4E5F47000 (Accessed: 19 July 2011). 124 People’s Republic of China. China Banking Regulatory Commission (2009) CBRC Issued Plans to Implement “Three Measures and One Guideline” for Loan Management. 11 December. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=200912189EDF1BF62C099909FF5592B3BFC9AB00 (Accessed: 19 July 2011). 125 People’s Republic of China. China Banking Regulatory Commission (2009) The CBRC released the Provisional Rules on the Management of Fixed Asset Loans. 27 July. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20090730E6B5625067D37BDBFF6B28D55450FB00 (Accessed: 19 July 2011). 126 China Daily (2010) ‘China's new credit rules put brakes on banks' lending binge’, China Daily. 22 February [Online]. Available at: http://www.chinadaily.com.cn/bizchina/2010-02/22/content_9483963.htm (Accessed: 19 July 2011). 127Ibid. 128Ibid. 129 Ibid. 130Ibid. 131 Ibid. 132 Ibid. 133 Wang, H. (2009) Disciplinary Commissioner WANG Huaqing’s speech [Speech at the Syndicated Loan Awarding Ceremony]. 7 July. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=2009070924F35CC8FA9D260FFF0AF8E9C9C15700 (Accessed: 17 July 2011).

68

134 Ibid. 135 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC held the second economic and financial situation briefing of 2011. 19 April. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201105099ECC7D9C5D69E048FF3AD7FAF301700 (Accessed: 14 July 2011). 136 Wang, H. (2010) Speech by the CBRC Vice Chairman WANG Huaqing [Speech at 2010 Lujiazui Forum]. 26 June. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201007210339137CBE126B75FFDDE305CD598400 (Accessed: 17 July 2011). 137 Liu, M. (2008) Addressing Challenges and Promoting Innovation: The Role of Regulators [Speech at the Caijing Magazine Annual Meeting] . 13 December. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=200812231AEA0DDAE8588812FF832957DA434400 (Accessed: 18 July 2011). 138 Wang, H. (2010) Speech by the CBRC Vice Chairman WANG Huaqing [Speech at 2010 Lujiazui Forum]. 26 June. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201007210339137CBE126B75FFDDE305CD598400 (Accessed: 17 July 2011). 139 Ibid. 140 Ibid. 141 Ibid. 142 Liu, M. (2010) Six Things that Make Us Concern [Keynote speech at the 16th International Conference on Banking Supervision in Singapore] 23rd September. Available at http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201010120E599F9AB245D490FF5BE7AD5A279B00. (Accessed: 17 July 2011). 143 Ibid. 144 Ibid. 145 McMahon, D. (2010) ‘World News: Asia: China proposes global finance pact --- In a rare international appeal, bank regulator calls for a treaty to guard against the failure of major lenders’, The Wall Street Journal Asia. 11 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 146 People’s Republic of China. China Banking Regulatory Commission (2011) The CBRC and the MAS Signed Agreement to Enhance Cooperation in Resolving Troubled Cross-Border Financial Institutions [Press Release] 3 August. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=201108129C1F7198EC2F2847FF36805C09A46E00 (Accessed: 22 August 2011).

69

147 McMahon, D. (2010) ‘World News: Asia: China proposes global finance pact --- In a rare international appeal, bank regulator calls for a treaty to guard against the failure of major lenders’, The Wall Street Journal Asia. 11 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 148 Ibid. Chapter 2: Hong Kong 1 Hong Kong SAR. Hong Kong Monetary Authority (2011) Implementation of Basel III in Hong Kong. 26 January. Available at: http://www.info.gov.hk/hkma/eng/bank/basel3/index.htm (Accessed: 4 August 2011). 2 Yam, J. (2009) Speech at the Joint HKAB – HKIB Dinner in honour of Mr Joseph Yam's retirement as Chief Executive of the Hong Kong Monetary Authority [Speech at 2009 Joint HKAB-HKIB Dinner]. 28 September. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090928e1.htm (Accessed: 4 August 2011). 3 Choi, Y.K. (2008) The Financial Stability Forum’s Report on Enhancing Market and Institutional Resilience [Letter to the Chief Executive of all authorized institutions] 20 May. Available at: http://www.info.gov.hk/hkma/eng/guide/circu_date/20080520e1.htm (Accessed: 4 August 2011). 4 Stein, P. (2010) ‘The View from Hong Kong: For a former regulator, danger is in overregulation’, The Wall Street Journal Asia. 29 March [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 4 August 2011). 5 Yam, J. (2009) Address by Joseph Yam, Chief Executive, Hong Kong Monetary Authority [Speech at Bank Negara Malaysia 50th Anniversary Celebrations: Ceremony on 8 February 2009]. 8 February. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090208e1.htm (Accessed: 4 August 2011). 6 Brereton, N. (2007) ‘Emerging Mkts Escape Sub-prime Crisis; Debt Less Complex-HKMA’, Dow Jones Newswires. 9 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 7 Yam, J. (2009) Speech at the Joint HKAB – HKIB Dinner in honour of Mr Joseph Yam's retirement as Chief Executive of the Hong Kong Monetary Authority [Speech at 2009 Joint HKAB-HKIB Dinner]. 28 September. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090928e1.htm (Accessed: 4 August 2011). 8 Ibid. 9 Yam, J. (2009) Address by Joseph Yam, Chief Executive, Hong Kong Monetary Authority [Speech at Bank Negara Malaysia 50th Anniversary Celebrations: Ceremony on 8 February 2009]. 8 February. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090208e1.htm (Accessed: 4 August 2011).

70

10 Yam, J. (2009) Speech at the Joint HKAB – HKIB Dinner in honour of Mr Joseph Yam's retirement as Chief Executive of the Hong Kong Monetary Authority [Speech at 2009 Joint HKAB-HKIB Dinner]. 28 September. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090928e1.htm (Accessed: 4 August 2011). 11 Yam, J. (2009) Address by Joseph Yam, Chief Executive, Hong Kong Monetary Authority [Speech at Bank Negara Malaysia 50th Anniversary Celebrations: Ceremony on 8 February 2009]. 8 February. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090208e1.htm (Accessed: 4 August 2011). 12 Yam, J. (2009) Speech at the Joint HKAB – HKIB Dinner in honour of Mr Joseph Yam's retirement as Chief Executive of the Hong Kong Monetary Authority [Speech at 2009 Joint HKAB-HKIB Dinner]. 28 September. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090928e1.htm (Accessed: 4 August 2011). 13 FRSGlobal (2011) ‘Comment piece on Basel III in Hong Kong’, FRSGlobal [Online]. Available at: http://www.frsglobal.com/news_and_events/basel-iii-in-hong-kong.html (Accessed: 5 August 2011). 14 Vaghela, V. (2011) ‘Asian regulators get tough on liquidity ring-fencing’, Asia Risk. 1 April [Online]. Available at: http://www.risk.net/asia-risk/feature/2041993/asian-regulators-tough-liquidity-ring-fencing (Accessed: 5 August 2011). 15 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 16 Ibid. 17Ibid. 18 Ibid. 19 Wood, D. (2010) ‘Regulators will solve liquid assets shortage, says HKMA’s Kemp’, Risk magazine. 1 December [Online]. Available at: http://www.risk.net/risk-magazine/interview/1898538/regulators-solve-liquid-assets-shortage-hkma-s-kemp (10 August 2011). 20 Hong Kong SAR. Hong Kong Monetary Authority (2011) Implementation of Basel III in Hong Kong. 26 January. Available at: http://www.info.gov.hk/hkma/eng/bank/basel3/index.htm (Accessed: 4 August 2011). 21 Yiu, E. (2010) ‘HK banks 'need not worry' over Basel III rules’, South China Morning Post. 14 September [Online]. Available at: http://global.factiva.com/ha/default.aspx )Accessed: 5 August 2011). 22 Wong, V. (2011) ‘Lenders may need more high-quality liquid assets for new rules, HKMA says’, Hong Kong Economic Journal. 2 June [Online]. Available at:

71

http://www.ejinsight.com/template/eng/news/jsp/detail.jsp?dnews_id=214&title_id=14047 (Accessed: 5 August 2011). 23 Hong Kong SAR. Hong Kong Monetary Authority (2011) Implementation of Basel III in Hong Kong. 26 January. Available at: http://www.info.gov.hk/hkma/eng/bank/basel3/index.htm (Accessed: 4 August 2011). 24 Wong, E., Fong, T., Li, K. and Choi, H. (2010) ‘An Assessment of The Long-term Economic Impact of the New Regulatory reform on Hong Kong’, Hong Kong Monetary Authority, Research Note 05/2010 Available at: http://www.info.gov.hk/hkma/eng/research/notes/pdf/RN-05-2010.pdf (Accessed: 4 August 2011). 25 Ibid. 26 Yiu, E. (2010) ‘HK banks 'need not worry' over Basel III rules’, South China Morning Post. 14 September [Online]. Available at: http://global.factiva.com/ha/default.aspx )Accessed: 5 August 2011). 27 Forchielli, A. and Pagliarini, A. (2010) ‘Basel III: Implications for China Banks and Financial System’, Caixin Online. 30 November [Online]. Available at: http://blog.english.caing.com/article/126/ (Accessed: 5 August 2011). 28 Ibid. 29 Yiu, E. (2010) ‘HK banks 'need not worry' over Basel III rules’, South China Morning Post. 14 September [Online]. Available at: http://global.factiva.com/ha/default.aspx )Accessed: 5 August 2011). 30 Ibid. 31 Chen, O. (2011) ‘Raising the reserves ... and doubts’, China Daily. 3 August [Online]. Available at: http://www.chinadaily.com.cn/hkedition/2011-08/03/content_13036922.htm (Accessed: 10 August 2011). 32 Ibid. 33 Ibid. 34 Hong Kong Economic Journal (2011) ‘如何避过第二震’ [How to avoid the second earthquake], Hong Kong Economic Journal (Chinese version). 21 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011) 35 Risk magazine (2011) ‘What Basel III means to us’, Risk magazine. 10 January [Online]. Available at: http://www.risk.net/risk-magazine/opinion/1935869/basel-iii-means (Accessed: 5 August 2011). 36Ibid. 37 Ibid.

72

38 Gopalan, N. (2010) ‘The View From Hong Kong: Opportunity as banks shed assets’, The Wall Street Journal Asia. 14 December [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 39 Ibid. 40 Ibid. 41 Ibid. 42 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 43 Wood, D. (2010) ‘Regulators will solve liquid assets shortage, says HKMA’s Kemp’, Risk magazine. 1 December [Online]. Available at: http://www.risk.net/risk-magazine/interview/1898538/regulators-solve-liquid-assets-shortage-hkma-s-kemp (10 August 2011). 44 Ibid. 45 Yam, J. (2008) G20 Summit. 27 November [Online]. Available at: http://www.info.gov.hk/hkma/eng/viewpt/20081127e.htm (Accessed: 5 August 2011). 46 Chen, O. (2010) ‘Bank lending up 26% to end-Sept’, China Daily – Hong Kong Edition. 18 December [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 22 August 2011). 47 Ibid. 48Chan, N.T.L. (2011) Credit Growth [Letter to the Chief Executive of All Authorized Institutions] 11 April. Available at: http://www.info.gov.hk/hkma/eng/guide/circu_date/20110411e1.pdf (Accessed: 14 July 2011) 49 Ibid. 50 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 51 Hong Kong SAR. Hong Kong Monetary Authority (2011) Implementation of Basel III in Hong Kong. 26 January. Available at: http://www.info.gov.hk/hkma/eng/bank/basel3/index.htm (Accessed: 4 August 2011) 52 Wood, D. (2010) ‘Regulators will solve liquid assets shortage, says HKMA’s Kemp’, Risk magazine. 1 December [Online]. Available at: http://www.risk.net/risk-magazine/interview/1898538/regulators-solve-liquid-assets-shortage-hkma-s-kemp (10 August 2011).

73

53 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 54 Basel Committee on Banking Supervision (2010) Basel III: International framework for liquidity risk measurement, standards and monitoring. Bank for International Settlements (December 2010). Available at http://www.bis.org/publ/bcbs188.pdf (Accessed: 7 August 2011). 55 Ibid. 56 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 57Hong Kong SAR. Hong Kong Monetary Authority (2011) Implementation of Basel III in Hong Kong. 26 January. Available at: http://www.info.gov.hk/hkma/eng/bank/basel3/index.htm (Accessed: 4 August 2011). 58 Hong Kong Economic Times (2011) ‘金管局完成港银压测’ [HKMA completes stress tests on Hong Kong banks], Hong Kong Economic Times. 16 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 25 August 2011). 59 Vaghela, V. (2011) ‘HKMA’s Yuen urges banks to take action now on Basel III LCR; warns of negative impact for corporate debt markets’, Asia Risk. 29 March [Online]. Available at: http://www.risk.net/asia-risk/news/2038355/hkma-s-yuen-urges-banks-action-basel-iii-lcr-warns-negative-impact-corporate-debt-markets (Accessed: 5 August 2011). 60 Ibid. 61 Ibid. 62 Yiu, E. (2011) ‘Scramble for deposits set to push up rates’, South China Morning Post. 3 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 63 Ibid. 64 Vaghela, V. (2011) ‘Revised Basel III liquidity rules force Asia into uncharted territory’, AsiaRisk. 1 March [Online]. Available at: http://www.risk.net/asia-risk/feature/2029208/revised-basel-iii-liquidity-rules-forces-asia-uncharted-territory (Accessed: 14 July 2011). 65 Hong Kong SAR. Hong Kong Monetary Authority (2011) Implementation of Basel III in Hong Kong. 26 January. Available at: http://www.info.gov.hk/hkma/eng/bank/basel3/index.htm (Accessed: 4 August 2011). 66 Yiu, E. (2011) ‘Scramble for deposits set to push up rates’, South China Morning Post. 3 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 67 Vaghela, V. (2011) ‘Revised Basel III liquidity rules force Asia into uncharted territory’, AsiaRisk. 1 March [Online]. Available at: http://www.risk.net/asia-risk/feature/2029208/revised-basel-iii-liquidity-rules-forces-asia-uncharted-territory (Accessed: 14 July 2011).

74

68 Forchielli, A. and Pagliarini, A. (2010) ‘Basel III: Implications for China Banks and Financial System’, Caixin Online. 30 November [Online]. Available at: http://blog.english.caing.com/article/126/ (Accessed: 5 August 2011). 69 Vaghela, V. (2011) ‘Revised Basel III liquidity rules force Asia into uncharted territory’, AsiaRisk. 1 March [Online]. Available at: http://www.risk.net/asia-risk/feature/2029208/revised-basel-iii-liquidity-rules-forces-asia-uncharted-territory (Accessed: 14 July 2011). 70Ibid. 71 Ibid. 72 Ibid. 73Ibid. 74Ibid. 75 Ibid. 76 Ibid. 77 Vaghela, V. (2011) ‘DBS risk chief fears Basel III liquidity rules still ‘not realistic’, Asia Risk. 10 February [Online]. Available at: http://www.risk.net/asia-risk/news/2025023/dbs-risk-chief-slams-basel-iii-liquidity-rules-not-realistic (Accessed: 6 August 2011) 78 Vaghela, V. (2011) ‘Revised Basel III liquidity rules force Asia into uncharted territory’, AsiaRisk. 1 March [Online]. Available at: http://www.risk.net/asia-risk/feature/2029208/revised-basel-iii-liquidity-rules-forces-asia-uncharted-territory (Accessed: 14 July 2011). 79 Basel Committee on Banking Supervision (2010) Basel III: International framework for liquidity risk measurement, standards and monitoring. Bank for International Settlements (December 2010). Available at http://www.bis.org/publ/bcbs188.pdf (Accessed: 7 August 2011). 80 Vaghela, V. (2011) ‘Revised Basel III liquidity rules force Asia into uncharted territory’, AsiaRisk. 1 March [Online]. Available at: http://www.risk.net/asia-risk/feature/2029208/revised-basel-iii-liquidity-rules-forces-asia-uncharted-territory (Accessed: 14 July 2011). 81 Ibid. 82 Ibid. 83 Ibid. 84 Ibid. 85 Ibid.

75

86 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 87 Ibid. 88 Hong Kong SAR. Hong Kong Monetary Authority (2011) Implementation of Basel III in Hong Kong. 26 January. Available at: http://www.info.gov.hk/hkma/eng/bank/basel3/index.htm (Accessed: 4 August 2011). 89 Noyes, K. (2011) ‘Regulatory reform puts risk management under threat in Asia’, Asia Risk. 5 July [Online].Available at: http://www.risk.net/asia-risk/feature/2083736/regulatory-reform-risk-management-threat-asia (Accessed: 7 August 2011). 90 Ibid. 91 Ibid. 92 Ibid. 93 Ibid. 94Ibid. 95 Ibid. 96 Ibid. 97 Ibid. 98 Ibid. 99 Hong Kong SAR. Hong Kong Monetary Authority (2011) Prudential Supervisory Measures for Mortgage Lending. [Press Release]. 10 June. Available at: http://www.info.gov.hk/hkma/eng/press/2011/20110610e4.htm (Accessed: 4 August 2011). 100 Ibid. 101 Ibid. 102 Yuen, A. (2010) Prudential Measures for Property Mortgage Loans [Letter to the Chief Executives of All Authorized Institutions] 19 November. Available at: http://www.info.gov.hk/hkma/eng/guide/circu_date/20101119e1.pdf (Accessed: 4 August 2011). 103Ibid. 104 Man, N. (2010) Prudential measures for residential mortgage loans [Letter to the Chief Executive of all authorised institutions] 19 August. Available at: http://www.info.gov.hk/hkma/eng/guide/circu_date/20100819e1.pdf (Accessed: 4 August 2011).

76

105 Hong Kong SAR. Hong Kong Monetary Authority (2011) Prudential Supervisory Measures for Mortgage Lending. [Press Release.] 10 June. Available at: http://www.info.gov.hk/hkma/eng/press/2011/20110610e4.htm (Accessed: 4 August 2011). 106 Ibid. 107 Choi, Y.K. (2008) Residential mortgage loans (RMLs) [Letter to the Chief Executive of All Authorized Institutions] 20 March. Available at: http://www.info.gov.hk/hkma/eng/guide/circu_date/20080320e1.htm (Accessed: 5 August 2011). 108 Choi, Y.K. (2009) Best lending practices for residential mortgage loans [Letter to the Chief Executive of all authorized institutions] 30 October. Available at: http://www.info.gov.hk/hkma/eng/guide/circu_date/20091030e1.htm (Accessed: 4 August 2011). 109 Chan, N.T.L. (2009) Risk of Asset-price bubbles [Speech delivered in Chinese at the Hong Kong Economic Summit]. 14 December. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/norman/20091214e1.htm (Accessed: 4 August 2011). 110 Yam, J. (2009) Speech at the Joint HKAB – HKIB Dinner in honour of Mr Joseph Yam's retirement as Chief Executive of the Hong Kong Monetary Authority [Speech at 2009 Joint HKAB-HKIB Dinner]. 28 September. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090928e1.htm (Accessed: 4 August 2011). 111 Ibid. 112 Wong, E., Fong, T., Li, K. and Choi, H. (2011) ‘Loan-to-Value Ratio as a Macro-Prudential Tool – Hong Kong's Experience and Cross-Country Evidence’, Hong Kong Monetary Authority, Working Paper 01/2011. Available at: http://www.info.gov.hk/hkma/eng/research/working/working_f.htm (Accessed: 4 August 2011). 113 Ibid. 114 Ibid. 115 Ibid. 116 Ibid. 117 Ibid. 118 Stein, P. (2010) ‘The View from Hong Kong: For a former regulator, danger is in overregulation’, The Wall Street Journal Asia. 29 March [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 4 August 2011). 119 Ibid.

77

120 Vaghela, V. (2011) ‘Asian regulators get tough on liquidity ring-fencing’, Asia Risk. 1 April [Online]. Available at: http://www.risk.net/asia-risk/feature/2041993/asian-regulators-tough-liquidity-ring-fencing (Accessed: 5 August 2011). 121 Ibid. 122 Ibid. 123 Ibid. 124 Ibid. 125 Ibid. 126 Ibid. 127 Ibid. 128 Ibid. 129 Ibid. 130 Ibid. 131 Ibid. 132 Ibid. 133 Ibid. 134 Ibid. 135 Pang, P. (2008) Launch of the Mortgage Guarantee Programme (MGP) by Cagamas HKMC Berhad [Speech at Kuala Lumpur]. 4 July. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/peter/20080704e.htm (Accessed: 4 August 2011). 136 Ibid. 137 Ibid. 138 Ibid. 139 Ibid. 140 Ibid.

78

Chapter 3: Singapore 1 Heng, S.K. (2010) Achieving Good Regulatory Outcomes – The Way Forward [Welcome Speech at the International Conference of Banking Supervisors (ICBS)]. 22 September. Available at: http://www.mas.gov.sg/news_room/statements/2010/Welcome_Speech_By_Mr_Heng_Swee_Keat_MD_MAS_To_The_International_Conference_Of_Banking_Supervisors_ICBS_on_22_Sept_2010.html (Access: 12 August 2011). 2 Singapore. Monetary Authority of Singapore (2010) MAS Supports Global Agreement on Higher Minimum Capital Standards. [Press Release]. 13 September. Available at: http://www.mas.gov.sg/news_room/press_releases/2010/MAS_Supports_Global_Agreement_on_Higher_Minimum_Capital_Standards.html (Accessed: 12 August 2011). 3 Lim, H. K. (2011) Bank Capital Adequacy and Institutional Structure – Singapore’s Approach [Keynote Address at 38th Association of Banks in Singapore (ABS), Annual Dinner, Raffles City Convention Centre]. 28 June. Available at: http://www.mas.gov.sg/news_room/statements/2011/Keynote_Address_by_Mr_Lim_Hng_Kiang_Minister_for_Trade_and_Industry_and_DC_MAS_at_the_38th_ABS_Annual_Dinner.html (Accessed: 12 August 2011). 4 Menon, R. (2011) A New Financial Landscape: Rebalancing on Three Fronts [Opening Address at the Inaugural Sim Kee Boon Institute Annual Conference on Financial Economics] 5 May. Available at: http://www.mas.gov.sg/news_room/statements/2011/A_New_Financial_Landscape_Rebalancing_on_Three_Fronts_Ravi_Menon_MD_MAS_Opening_Address_at_the_Inaugural_Sim_Kee_Boon_Institute_Annual_Conference_on_Financial_Economics.html (Accessed: 12 August 2011). 5 Heng, S.K. (2010) Achieving Good Regulatory Outcomes – The Way Forward [Welcome Speech at the International Conference of Banking Supervisors (ICBS)]. 22 September. Available at: http://www.mas.gov.sg/news_room/statements/2010/Welcome_Speech_By_Mr_Heng_Swee_Keat_MD_MAS_To_The_International_Conference_Of_Banking_Supervisors_ICBS_on_22_Sept_2010.html (Access: 12 August 2011). 6 Menon, R. (2011) A New Financial Landscape: Rebalancing on Three Fronts [Opening Address at the Inaugural Sim Kee Boon Institute Annual Conference on Financial Economics] 5 May. Available at: http://www.mas.gov.sg/news_room/statements/2011/A_New_Financial_Landscape_Rebalancing_on_Three_Fronts_Ravi_Menon_MD_MAS_Opening_Address_at_the_Inaugural_Sim_Kee_Boon_Institute_Annual_Conference_on_Financial_Economics.html (Accessed: 12 August 2011). 7 Heng, S.K. (2010) Achieving Good Regulatory Outcomes – The Way Forward [Welcome Speech at the International Conference of Banking Supervisors (ICBS)]. 22 September. Available at: http://www.mas.gov.sg/news_room/statements/2010/Welcome_Speech_By_Mr_Heng_Swee_Keat_MD_MAS_To_The_International_Conference_Of_Banking_Supervisors_ICBS_on_22_Sept_2010.html (Access: 12 August 2011). 8 Ibid. 9 Chen, G. (2010) ‘New Basel rules not a problem for S'pore banks’, Straits Times. 24 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 10 Ibid.

79

11 Heng, S.K. (2010) Achieving Good Regulatory Outcomes – The Way Forward [Welcome Speech at the International Conference of Banking Supervisors (ICBS)]. 22 September. Available at: http://www.mas.gov.sg/news_room/statements/2010/Welcome_Speech_By_Mr_Heng_Swee_Keat_MD_MAS_To_The_International_Conference_Of_Banking_Supervisors_ICBS_on_22_Sept_2010.html (Access: 12 August 2011). 12 Lim, H.K. (2010) Regulatory Response to Global Financial Crisis [Reply to Parliamentary Questions]. 11 January. Available at: http://www.mas.gov.sg/news_room/parliamentary_questions/2010/Reply_to_PQ_on_Regulatory_Response_to_Global_Financial_Crisis.html (Accessed: 13 August 2011). 13Ibid. 14 Ibid. 15 Chen, G. (2010) ‘New Basel rules not a problem for S'pore banks’, Straits Times. 24 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 16 Lim, H. K. (2011) Bank Capital Adequacy and Institutional Structure – Singapore’s Approach [Keynote Address at 38th Association of Banks in Singapore (ABS), Annual Dinner, Raffles City Convention Centre]. 28 June. Available at: http://www.mas.gov.sg/news_room/statements/2011/Keynote_Address_by_Mr_Lim_Hng_Kiang_Minister_for_Trade_and_Industry_and_DC_MAS_at_the_38th_ABS_Annual_Dinner.html (Accessed: 12 August 2011). 17 Menon, R. (2011) MAS' Annual Report 2010/11 [Opening Remarks at Press Conference]. 21 July. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Remarks_at_MAS_AR_2010_11_Press_Conference.html (Accessed: 12 August 2011). 18 Ibid. 19 Tan, C. (2011) ‘Low interest rates, high staff costs may dent bank profits’, Business Times Singapore. 6 January [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 20 Lim, L. (2011) ‘Financial sector set to gain from new rules’, Today Singapore. 4 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 16 August 2011). 21 Edelmann, C. (2011) ‘Asian banks ‘breeze through’ Basel III implementation’, Asian Banking & Finance. 2 August [Online]. Available at: http://asianbankingandfinance.net/investment-banking/commentary/asian-banks-%E2%80%98breeze-through%E2%80%99-basel-iii-implementation (Accessed: 5 August 2011). 22 Business Times Singapore (2011) ‘Gunning for threefold growth by 2015’, Business Times Singapore. 6 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011).

80

23 Leong, K.K. and Chia, G. (2010) ‘A new era in banking unfolds’, Business Times Singapore. 12 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 24 Ibid. 25 Tan, C. (2010) ‘Bankers close ranks to wage war on new rules’, Business Times Singapore. 2 November [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 26 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 27 Ibid. 28 Ibid. 29 Singapore. Monetary Authority of Singapore (2010) MAS Supports Global Agreement on Higher Minimum Capital Standards. [Press Release]. 13 September. Available at: http://www.mas.gov.sg/news_room/press_releases/2010/MAS_Supports_Global_Agreement_on_Higher_Minimum_Capital_Standards.html (Accessed: 12 August 2011). 30 Lim, H. K. (2011) Bank Capital Adequacy and Institutional Structure – Singapore’s Approach [Keynote Address at 38th Association of Banks in Singapore (ABS), Annual Dinner, Raffles City Convention Centre]. 28 June. Available at: http://www.mas.gov.sg/news_room/statements/2011/Keynote_Address_by_Mr_Lim_Hng_Kiang_Minister_for_Trade_and_Industry_and_DC_MAS_at_the_38th_ABS_Annual_Dinner.html (Accessed: 12 August 2011). 31 Ibid. 32 Ibid. 33 Ibid. 34 Ibid. 35 Singapore. Monetary Authority of Singapore (2011) MAS Strengthens Capital Requirements for Singapore-incorporated Banks [Press Release]. 28 June. Available at: http://www.mas.gov.sg/news_room/press_releases/2011/MAS_Strengthens_Capital_Requirements_for_Singapore_incorporated_Banks.html (Accessed: 12 August 2011). 36 Ibid. 37 Lim, H. K. (2011) Bank Capital Adequacy and Institutional Structure – Singapore’s Approach [Keynote Address at 38th Association of Banks in Singapore (ABS), Annual Dinner, Raffles City Convention Centre]. 28 June. Available at: http://www.mas.gov.sg/news_room/statements/2011/Keynote_Address_by_Mr_Lim_Hng_Kiang_Minister_for_Trade_and_Industry_and_DC_MAS_at_the_38th_ABS_Annual_Dinner.html (Accessed: 12 August 2011).

81

38 Ibid. 39 Business Times Singapore (2011) ‘Gunning for threefold growth by 2015’, Business Times Singapore. 6 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 40 Gupta, P. (2011) ‘National Day 2011’, Business Times Singapore. 1 August [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 41 Business Times Singapore (2011) ‘Tough capital norms help financial sector’, Business Times Singapore. 1 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 42 Ibid. 43 Business Times Singapore (2011) ‘Brokers' Take’, Business Times Singapore. 1 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 44 Lim, L. (2011) ‘Financial sector set to gain from new rules’, Today Singapore. 4 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 16 August 2011). 45 Yap, E. (2011) ‘New capital rules to benefit S'pore banks: Moody's’, Business Times Singapore. 6 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 46 Business Times Singapore (2011) ‘Brokers' Take’, Business Times Singapore. 1 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 47 Armstrong, R. and Lim, K. (2011) ‘RPT-UPDATE 1-Singapore banks to face tougher capital rules than Basel III’, Reuters News. 28 June[Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 48 Holmes, S. and Raghuvanshi, G. (2011) ‘Singapore Raises Bar On Capital For Banks’, The Wall Street Journal Asia. 29 June[Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 49 Armstrong, R. and Lim, K. (2011) ‘RPT-UPDATE 1-Singapore banks to face tougher capital rules than Basel III’, Reuters News. 28 June[Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 50 Yap, E. (2011) ‘Bank shares rise, shrugging off MAS rules’, Business Times Singapore. 30 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 51 Ibid. 52 Ibid. 53 Chen, G. (2010) ‘S'pore banks more than meet new rules’, Straits Times. 14 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011).

82

54 Gopalan, N. (2010) ‘The View From Hong Kong: Opportunity as banks shed assets’, The Wall Street Journal Asia. 14 December [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 5 August 2011). 55 Ibid. 56 Business Times Singapore (2010) ‘Private banks jostle for talent and clients’, Business Times Singapore. 24 December [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 57 Chen, G. (2010) ‘S'pore banks more than meet new rules’, Straits Times. 14 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 58 Low, A. (2011) ‘S'pore banks can meet new MAS ratios: OCBC chief’, Straits Times. 30 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 59Ibid. 60 Ibid. 61 Business Times Singapore (2010) ‘OCBC's Conner warns of Basel III downside’, Business Times Singapore. 26 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 62 Tan, C. (2010) ‘DBS CEO: Pressure on banks to exceed Basel’, Business Times Singapore. 14 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 63 Tan, C. (2010) ‘New bank rules ease fears, alter landscape’, Business Times Singapore. 14 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 64 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 65 Tan, C. (2010) ‘No sweat for S'pore banks as Basel III slides into view’, Business Times Singapore. 8 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 66 Business Times Singapore (2010) ‘OCBC's Conner warns of Basel III downside’, Business Times Singapore. 26 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 67 Business Times Singapore (2011) ‘Gunning for threefold growth by 2015’, Business Times Singapore. 6 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 68 Ibid.

83

69 Bank for International Settlements (2011) Measures for global systemically important banks agreed by the Group of Governors and Heads of Supervision. Bank of International Settlements (25 June). Available at http://www.bis.org/press/p110625.htm (Accessed: 26 June 2011). 70 Heng, S.K. (2010) Achieving Good Regulatory Outcomes – The Way Forward [Welcome Speech at the International Conference of Banking Supervisors (ICBS)]. 22 September. Available at: http://www.mas.gov.sg/news_room/statements/2010/Welcome_Speech_By_Mr_Heng_Swee_Keat_MD_MAS_To_The_International_Conference_Of_Banking_Supervisors_ICBS_on_22_Sept_2010.html (Access: 12 August 2011). 71 Ibid. 72 Yap, E. (2010) ‘PM Lee: Don't make onerous banking rules’, Business Times Singapore. 13 November [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 73 Ibid. 74 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 75 Basel Committee on Banking Supervision (2010) Basel III: International framework for liquidity risk measurement, standards and monitoring. Bank for International Settlements (December 2010). Available at http://www.bis.org/publ/bcbs188.pdf (Accessed: 7 August 2011). 76 Ibid. 77 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 78 Heng, S.K. (2011) Keynote Address by Mr Heng Swee Keat, Managing Director, Monetary Authority of Singapore [Keynote Address at the Opening of EDHEC-Risk Institute, Asia]. 21 January. Available at: http://www.mas.gov.sg/news_room/statements/2011/Keynote_Address_by_Mr_Heng_Swee_Keat_Managing_Director_Monetary_Authority_of_Singapore_at_the_Opening_of_EDHEC_Risk_Institute_Asia.html (Accessed: 13 August 2011). 79 Singapore. Monetary Authority of Singapore (2006) Consultation Paper on Liquidity Risk Supervision – A Revised Minimum Liquid Asset Framework. 19 May. Available at: http://www.mas.gov.sg/resource/publications/consult_papers/2006/ConsultationPaperMAS613.pdf (Accessed: 13 August 2011). 80 Menon, R. (2011) MAS' Annual Report 2010/11 [Opening Remarks at Press Conference]. 21 July. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Remarks_at_MAS_AR_2010_11_Press_Conference.html (Accessed: 12 August 2011).

84

81 Singapore. Monetary Authority of Singapore (2006) Consultation Paper on Liquidity Risk Supervision – A Revised Minimum Liquid Asset Framework. 19 May. Available at: http://www.mas.gov.sg/resource/publications/consult_papers/2006/ConsultationPaperMAS613.pdf (Accessed: 13 August 2011). 82 Menon, R. (2011) MAS' Annual Report 2010/11 [Opening Remarks at Press Conference]. 21 July. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Remarks_at_MAS_AR_2010_11_Press_Conference.html (Accessed: 12 August 2011). 83 Singapore. Monetary Authority of Singapore (2006) Consultation Paper on Liquidity Risk Supervision – A Revised Minimum Liquid Asset Framework. 19 May. Available at: http://www.mas.gov.sg/resource/publications/consult_papers/2006/ConsultationPaperMAS613.pdf (Accessed: 13 August 2011). 84 Ibid. 85 Ibid. 86 Ibid. 87Ibid. 88 Menon, R. (2011) MAS' Annual Report 2010/11 [Opening Remarks at Press Conference]. 21 July. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Remarks_at_MAS_AR_2010_11_Press_Conference.html (Accessed: 12 August 2011). 89 Ibid. 90 Ng, N.S. (2011) Welcome Address by Mr Ng Nam Sin, Assistant Managing Director, Monetary Authority of Singapore [Welcome Address at the Clearstream's 2nd Global Securities Financing Conference Asia]. 31 March. Available at: http://www.mas.gov.sg/news_room/statements/2011/2nd_Global_Securities_Financing_Conference_Asia_Welcome_Address_by_Mr_Ng_Nam_Sin_AMD_MAS.html (Accessed: 12 August 2011). 91 Menon, R. (2011) MAS' Annual Report 2010/11 [Opening Remarks at Press Conference]. 21 July. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Remarks_at_MAS_AR_2010_11_Press_Conference.html (Accessed: 12 August 2011). 92 Ibid. 93 Yap, E. (2011) ‘Bank shares rise, shrugging off MAS rules’, Business Times Singapore. 30 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 94 Vaghela, V. (2011) ‘Revised Basel III liquidity rules force Asia into uncharted territory’, AsiaRisk. 1

March [Online]. Available at: http://www.risk.net/asia-risk/feature/2029208/revised-basel-iii-

liquidity-rules-forces-asia-uncharted-territory (Accessed: 14 July 2011).

85

95 Basel Committee on Banking Supervision (2010) Basel III: International framework for liquidity risk measurement, standards and monitoring. Bank for International Settlements (December 2010). Available at http://www.bis.org/publ/bcbs188.pdf (Accessed: 7 August 2011). 96 Vaghela, V. (2011) ‘Revised Basel III liquidity rules force Asia into uncharted territory’, AsiaRisk. 1

March [Online]. Available at: http://www.risk.net/asia-risk/feature/2029208/revised-basel-iii-

liquidity-rules-forces-asia-uncharted-territory (Accessed: 14 July 2011).

97Ibid.

98 Ibid. 99 Ibid. 100 Low, A. (2011) ‘S'pore banks can meet new MAS ratios: OCBC chief’, Straits Times. 30 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 101 Vaghela, V. (2011) ‘Revised Basel III liquidity rules force Asia into uncharted territory’, AsiaRisk. 1 March [Online]. Available at: http://www.risk.net/asia-risk/feature/2029208/revised-basel-iii-liquidity-rules-forces-asia-uncharted-territory (Accessed: 14 July 2011). 102 Yap, E. (2011) ‘New capital rules to benefit S'pore banks: Moody's’, Business Times Singapore. 6 July [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 103 Basel Committee on Banking Supervision (2010) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements (December 2010, Revised June 2011). Available at http://www.bis.org/publ/bcbs189.pdf (Accessed: 14 July 2011). 104 Ibid. 105 Heng, S.K. (2011) Keynote Address by Mr Heng Swee Keat, Managing Director, Monetary Authority of Singapore [Keynote Address at the Opening of EDHEC-Risk Institute, Asia]. 21 January. Available at: http://www.mas.gov.sg/news_room/statements/2011/Keynote_Address_by_Mr_Heng_Swee_Keat_Managing_Director_Monetary_Authority_of_Singapore_at_the_Opening_of_EDHEC_Risk_Institute_Asia.html (Accessed: 13 August 2011). 106 Ng, N.S. (2011) Welcome Address by Mr Ng Nam Sin, Assistant Managing Director, Monetary Authority of Singapore [Welcome Address at the Clearstream's 2nd Global Securities Financing Conference Asia]. 31 March. Available at: http://www.mas.gov.sg/news_room/statements/2011/2nd_Global_Securities_Financing_Conference_Asia_Welcome_Address_by_Mr_Ng_Nam_Sin_AMD_MAS.html (Accessed: 12 August 2011). 107 Ibid. 108 Lim, H.K. (2011) Opening Remarks by Mr Lim Hng Kiang Minister for Trade & Industry and Deputy Chairman, Monetary Authority of Singapore [Opening Remarks at the 8th Annual Citi Asia Pacific Investor Conference 2011]. 16 February. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Remarks_by_Mr_Lim_Hng_Kiang_

86

MTI_and_DC_MAS_at_the_8th_Annual_Citi_Asia_Pacific_Investor_Conference_2011.html (Accessed: 12 August 2011). 109 Ibid. 110 Ibid. 111 Menon, R. (2011) MAS' Annual Report 2010/11 [Opening Remarks at Press Conference]. 21 July. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Remarks_at_MAS_AR_2010_11_Press_Conference.html (Accessed: 12 August 2011). 112 Khoo, L. (2010) ‘SGX extending OTC clearing to derivatives’, Business Times Singapore. 21 September [Online]. Available at http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 113 Ng, N.S. (2011) Welcome Address by Mr Ng Nam Sin, Assistant Managing Director, Monetary Authority of Singapore [Welcome Address at the Clearstream's 2nd Global Securities Financing Conference Asia]. 31 March. Available at: http://www.mas.gov.sg/news_room/statements/2011/2nd_Global_Securities_Financing_Conference_Asia_Welcome_Address_by_Mr_Ng_Nam_Sin_AMD_MAS.html (Accessed: 12 August 2011). 114 Khoo, L. (2010) ‘SGX extending OTC clearing to derivatives’, Business Times Singapore. 21 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 115 Ibid. 116 Singapore. Monetary Authority of Singapore (2011) Measures to Maintain a Stable and Sustainable Property Market [Press Release]. 13 January. Available at: http://www.mas.gov.sg/news_room/press_releases/2011/Measures_To_Maintain_A_Stable_And_Sustainable_Property_Market.html (Accessed: 12 August 2011) 117 Heng, S.K. (2010) Achieving Good Regulatory Outcomes – The Way Forward [Welcome Speech at the International Conference of Banking Supervisors (ICBS)]. 22 September. Available at: http://www.mas.gov.sg/news_room/statements/2010/Welcome_Speech_By_Mr_Heng_Swee_Keat_MD_MAS_To_The_International_Conference_Of_Banking_Supervisors_ICBS_on_22_Sept_2010.html (Access: 12 August 2011). 118 Chen, G. (2010) ‘MAS spells out six tenets of regulation’, Straits Times. 9 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 119 Singapore. Monetary Authority of Singapore (2010) Joint Press Release Measures to Maintain a Stable and Sustainable Property Market [Press Release]. 30 August. Available at: http://www.mas.gov.sg/news_room/press_releases/2010/Measures_to_Maintain_a_Stable_and_Sustainable_Property_Market.html (Accessed: 12 August 2011). 120 Singapore. Monetary Authority of Singapore (2010) Measures To Ensure a Stable and Sustainable Property Market [Press Release]. 19 February. Available at:

87

http://www.mas.gov.sg/news_room/press_releases/2010/Measures_To_Ensure_a_Stable_and_Sustainable_Property_Market.html (Access: 12 August 2011). 121 Singapore. Monetary Authority of Singapore (2010) Joint Press Release Measures to Maintain a Stable and Sustainable Property Market [Press Release]. 30 August. Available at: http://www.mas.gov.sg/news_room/press_releases/2010/Measures_to_Maintain_a_Stable_and_Sustainable_Property_Market.html (Accessed: 12 August 2011). 122 Heng, S.K. (2010) Achieving Good Regulatory Outcomes – The Way Forward [Welcome Speech at the International Conference of Banking Supervisors (ICBS)]. 22 September. Available at: http://www.mas.gov.sg/news_room/statements/2010/Welcome_Speech_By_Mr_Heng_Swee_Keat_MD_MAS_To_The_International_Conference_Of_Banking_Supervisors_ICBS_on_22_Sept_2010.html (Access: 12 August 2011). 123 Heng, S.K. (2011) Keynote Address by Mr Heng Swee Keat, Managing Director, Monetary Authority of Singapore [Keynote Address at the Opening of EDHEC-Risk Institute, Asia]. 21 January. Available at: http://www.mas.gov.sg/news_room/statements/2011/Keynote_Address_by_Mr_Heng_Swee_Keat_Managing_Director_Monetary_Authority_of_Singapore_at_the_Opening_of_EDHEC_Risk_Institute_Asia.html (Accessed: 13 August 2011). 124 Singapore. Monetary Authority of Singapore (2010) Measures To Ensure a Stable and Sustainable Property Market [Press Release]. 19 February. Available at: http://www.mas.gov.sg/news_room/press_releases/2010/Measures_To_Ensure_a_Stable_and_Sustainable_Property_Market.html (Access: 12 August 2011). 125 Singapore. Monetary Authority of Singapore (2010) Joint Press Release Measures to Maintain a Stable and Sustainable Property Market [Press Release]. 30 August. Available at: http://www.mas.gov.sg/news_room/press_releases/2010/Measures_to_Maintain_a_Stable_and_Sustainable_Property_Market.html (Accessed: 12 August 2011). 126 Singapore. Monetary Authority of Singapore (2010) Measures To Ensure a Stable and Sustainable Property Market [Press Release]. 19 February. Available at: http://www.mas.gov.sg/news_room/press_releases/2010/Measures_To_Ensure_a_Stable_and_Sustainable_Property_Market.html (Access: 12 August 2011). 127 Siow, L.S. (2011) ‘New measures expected to slow down home loans’, Business Times Singapore. 14 January [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 128 Shankari, U. (2011) ‘New steps rain on speculators' parade’, Business Times Singapore. 14 January [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 129 Siow, L.S. (2011) ‘New measures expected to slow down home loans’, Business Times Singapore. 14 January [Online] Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 130 Tan, C. (2010) ‘Hard slog looms as S'pore banks face strong headwinds’, Business Times Singapore. 16 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011).

88

131 Siow, L.S. (2011) ‘Speculation curbs to hit all and sundry’, Business Times Singapore. 17 January [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 132 Siow, L.S. (2011) ‘New measures expected to slow down home loans’, Business Times Singapore. 14 January [Online] Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 133 Siow, L.S. (2011) ‘Speculation curbs to hit all and sundry’, Business Times Singapore. 17 January [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 134 Ibid. 135 Singapore. Monetary Authority of Singapore (2011) Measures to Maintain a Stable and Sustainable Property Market [Press Release]. 13 January. Available at: http://www.mas.gov.sg/news_room/press_releases/2011/Measures_To_Maintain_A_Stable_And_Sustainable_Property_Market.html (Accessed: 12 August 2011). 136 Ibid. 137 Tan, C. (2010) ‘Hard slog looms as S'pore banks face strong headwinds’, Business Times Singapore. 16 September [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 138 Shankari, U. (2011) ‘New steps rain on speculators' parade’, Business Times Singapore. 14 January [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 139 Ibid. 140 Singapore. Monetary Authority of Singapore (2010) Tenets of Effective Regulation. June. Available at: http://www.mas.gov.sg/resource/publications/monographs/MAS-Monograph_Tenets_of_Effective_Regulation.pdf (Accessed: 13 August 2011).

141 Ibid.

142 Ibid.

143 Ibid. 144 Fernandez, A. (2008) Response to How Are Foreign Banks in Singapore Regulated. [Letter to Editor of MyPaper]. 26 September. Available at: http://www.mas.gov.sg/news_room/press_releases/2008/Response_to_How_Are_Foreign_Banks_in_Singapore_Regulated_260908.html (Accessed: 12 August 2011). 145 Singapore. Monetary Authority of Singapore (2006) Consultation Paper on Proposed MAS Notice 640: Minimum Asset Maintenance Requirements For Foreign Banks. 13 September. Available at: http://www.mas.gov.sg/resource/publications/consult_papers/2006/MAS640.pdf (Accessed: 13 August 2011). 146 Ibid.

89

147 Vaghela, V. (2011) ‘Asian regulators get tough on liquidity ring-fencing’, Asia Risk. 1 April [Online]. Available at: http://www.risk.net/asia-risk/feature/2041993/asian-regulators-tough-liquidity-ring-fencing (Accessed: 5 August 2011). 148 Ibid. 149 Ibid. 150 Ibid. 151 Ibid. 152 Tan, C. (2011) ‘Fillip for local banks from rule changes’, Business Times Singapore. 30 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 153 Ibid. 154 Ibid. 155 Heng, S.K. (2010) Achieving Good Regulatory Outcomes – The Way Forward [Welcome Speech at the International Conference of Banking Supervisors (ICBS)]. 22 September. Available at: http://www.mas.gov.sg/news_room/statements/2010/Welcome_Speech_By_Mr_Heng_Swee_Keat_MD_MAS_To_The_International_Conference_Of_Banking_Supervisors_ICBS_on_22_Sept_2010.html (Access: 12 August 2011). 156 Ibid. 157 Yap, E. (2010) ‘PM Lee: Don't make onerous banking rules’, Business Times Singapore. 13 November [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 13 August 2011). 158 Heng, S.K. (2010) Achieving Good Regulatory Outcomes – The Way Forward [Welcome Speech at the International Conference of Banking Supervisors (ICBS)]. 22 September. Available at: http://www.mas.gov.sg/news_room/statements/2010/Welcome_Speech_By_Mr_Heng_Swee_Keat_MD_MAS_To_The_International_Conference_Of_Banking_Supervisors_ICBS_on_22_Sept_2010.html (Access: 12 August 2011). 159 Ibid. 160 Ibid. 161 Lim, H. K. (2011) Bank Capital Adequacy and Institutional Structure – Singapore’s Approach [Keynote Address at 38th Association of Banks in Singapore (ABS), Annual Dinner, Raffles City Convention Centre]. 28 June. Available at: http://www.mas.gov.sg/news_room/statements/2011/Keynote_Address_by_Mr_Lim_Hng_Kiang_Minister_for_Trade_and_Industry_and_DC_MAS_at_the_38th_ABS_Annual_Dinner.html (Accessed: 12 August 2011).

90

162 Lim, H.K. (2010) Regulatory Response to Global Financial Crisis [Reply to Parliamentary Questions]. 11 January. Available at: http://www.mas.gov.sg/news_room/parliamentary_questions/2010/Reply_to_PQ_on_Regulatory_Response_to_Global_Financial_Crisis.html (Accessed: 13 August 2011). 163 Singapore. Monetary Authority of Singapore (2010) MAS Invites Comments on Proposed Enhancements to the Corporate Governance Framework [Press Release]. 18 March. Available at: http://www.mas.gov.sg/news_room/press_releases/2010/MAS_Invites_Comments_on_Proposed_Enhancements_to_the_Corporate_Governance_Framework.html (Accessed: 12 August 2011). 164 Singapore. Monetary Authority of Singapore (2011) Consultation Paper on Proposed Revisions to the Code of Corporate Governance. 14 June. Available at: http://www.mas.gov.sg/resource/publications/consult_papers/2011/Consultation_Paper_on_Proposed_Revisions_to%20the%20CCG_14Jun2011.pdf (Accessed: 12 August 2011). Chapter 4: The Beginnings of an Asian Monetary Fund 1 Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011). 2 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at: http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011). 3 Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011). 4 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at: http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011). 5Singapore. Monetary Authority of Singapore (2005) Monetary Authority of Singapore and IMF to Host High-Level Seminar on Asian Regional Financial Integration. [Press Release]. 29 August. Available at: http://www.mas.gov.sg/news_room/press_releases/2005/MAS_and_IMF_to_Host_High_level_Seminar_on_Asian.html (Accessed: 16 August 2011). 6 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at: http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011). 7 The New Nation (Bangladesh) (2010) ‘Collective approach needed to secure sustainable growth in Asia’, The New Nation (Bangladesh). 29 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 8 Bangkok Post (2010) ‘One for the money’, Bangkok Post. 3 October. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 9 Rana, P.B. (2011) ‘Why next IMF chief won't be Asian’, Straits Times. 26 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011).

91

10 Ariff, M. (2010) ‘Asia's obligations in the new order’, New Straits Times. 15 April [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 11 Vandore, E. and Pylas, P. (2010) ‘Europe plans its own crisis fund’, Associated Press Newswires. 9 March[Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 12 Menon, R. (2011) Resilience, Integration, Opportunity: The ASEAN Story. [Opening Address at the Merrill Lynch Asian Stars Conference 2011]. 18 May. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Address_by_Mr_Ravi_Menon_Managing_Director_MAS_at_the_Merrill_Lynch_Asian_Stars_Conference_2011_Resilience_Integration_Opportunity_The_ASEAN_Story.html (Accessed: 18 August 2011). 13 Ibid. 14 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at: http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011). 15 Pesek, W. (2009) ‘Summers, Geithner silent as IMF loses grip in Asia’, Bangkok Post. 7 May [Online]. Available at: http://www.bangkokpost.com/opinion/opinion/16261/summers-geithner-silent-as-imf-loses-grip-in-asia (Accessed: 19 August 2011). 16 Samboh, E. (2011) ‘ASEAN's AMRO may 'replace' IMF financial role’, The Jakarta Post. 8 April [Online]. Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 17 Bangkok Post (2010) ‘One for the money’, Bangkok Post. 3 October [Online] Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 18 Pesek, W. (2009) ‘Summers, Geithner silent as IMF loses grip in Asia’, Bangkok Post. 7 May [Online]. Available at: http://www.bangkokpost.com/opinion/opinion/16261/summers-geithner-silent-as-imf-loses-grip-in-asia (Accessed: 19 August 2011). 19 Shrestha, O. (2011) ‘It's time for major reforms at IMF’, Business Times Singapore. 23 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 18 August 2011). 20 Ibid. 21 Lim, H. and Tay, S. (2011) ‘Does Asia need the IMF? ‘, The Jakarta Post. 7 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 22 Ibid. 23 Ibid. 24 Rana, P.B. (2011) ‘Why next IMF chief won't be Asian’, Straits Times. 26 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 25 Lim, H. and Tay, S. (2011) ‘Does Asia need the IMF? ‘, The Jakarta Post. 7 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011).

92

26 Ibid. 27 Rana, P.B. (2011) ‘Why next IMF chief won't be Asian’, Straits Times. 26 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 28 Suryanarayana, P.S. (2011) ‘IMF for greater global cooperation’, The Hindu. 2 February [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 29 Talley, I. and Boschat, N. (2010) ‘IMF Wants Network Of Regional Funds’, The Wall Street Journal Online. 8 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 30 Rowley, A. (2011) ‘Japan's timely call to brace for fresh shocks’, Business Times Singapore. 23 February [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 31 Pesek, W. (2009) ‘Summers, Geithner silent as IMF loses grip in Asia’, Bangkok Post. 7 May [Online]. Available at: http://www.bangkokpost.com/opinion/opinion/16261/summers-geithner-silent-as-imf-loses-grip-in-asia (Accessed: 19 August 2011). 32 Eichengreen, B. (2009) ‘Can an Asian Monetary Fund accomplish what the IMF can’t?’, Taipei Times. 27 June [Online]. Available at: http://www.taipeitimes.com/News/editorials/archives/2009/06/27/2003447209 (Accessed: 19 August 2011). 33 Head, J. (2008) ‘Is it time for an Asian Monetary Fund?’, BBC News. 4 December [Online]. Available at: http://news.bbc.co.uk/1/hi/business/economy/7754167.stm (Accessed: 19 August 2011). 34 Lim, H. and Tay, S. (2011) ‘Does Asia need the IMF? ‘, The Jakarta Post. 7 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 35 Remo, M. (2010) ‘ADB pushes for creation of Asian Monetary Fund’, Philippine Daily Inquirer. 28 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 36 The Economist (2009) ‘An Asian Monetary Fund?’, The Economist. 6 May [Online]. Available at: http://www.economist.com/blogs/freeexchange/2009/05/an_asian_monetary_fund (Accessed: 19 August 2011). 37Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011). 38 Pesek, W. (2009) ‘Summers, Geithner silent as IMF loses grip in Asia’, Bangkok Post. 7 May [Online]. Available at: http://www.bangkokpost.com/opinion/opinion/16261/summers-geithner-silent-as-imf-loses-grip-in-asia (Accessed: 19 August 2011). 39 Ibid.

93

40 Eichengreen, B. (2009) ‘Can an Asian Monetary Fund accomplish what the IMF can’t?’, Taipei Times. 27 June [Online]. Available at: http://www.taipeitimes.com/News/editorials/archives/2009/06/27/2003447209 (Accessed: 19 August 2011). 41 The Economist (2009) ‘An Asian Monetary Fund?’, The Economist. 6 May [Online]. Available at: http://www.economist.com/blogs/freeexchange/2009/05/an_asian_monetary_fund (Accessed: 19 August 2011). 42Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011). 43 Eichengreen, B. (2009) ‘Can an Asian Monetary Fund accomplish what the IMF can’t?’, Taipei Times. 27 June [Online]. Available at: http://www.taipeitimes.com/News/editorials/archives/2009/06/27/2003447209 (Accessed: 19 August 2011). 44Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011). 45 Grimes, W.W. (2011) ‘The Asian Monetary Fund Reborn?: Implications of Chiang Mai Initiative Multilateralization’, Asia Policy, 11, January. Available at: http://www.nbr.org/publications/element.aspx?id=484 (Accessed: 19 August 2011). 46 Ibid. 47 Bangkok Post (2010) ‘One for the money’, Bangkok Post. 3 October [Online] Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 48 Remo, M. (2010) ‘ADB pushes for creation of Asian Monetary Fund’, Philippine Daily Inquirer. 28 October [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 49 Grimes, W.W. (2011) ‘The Asian Monetary Fund Reborn?: Implications of Chiang Mai Initiative Multilateralization’, Asia Policy, 11, January. Available at: http://www.nbr.org/publications/element.aspx?id=484 (Accessed: 19 August 2011). 50 Rowley, A. (2011) ‘Japan's timely call to brace for fresh shocks’, Business Times Singapore. 23 February [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 51 Eichengreen, B. (2009) ‘Can an Asian Monetary Fund accomplish what the IMF can’t?’, Taipei Times. 27 June [Online]. Available at: http://www.taipeitimes.com/News/editorials/archives/2009/06/27/2003447209 (Accessed: 19 August 2011). 52Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011).

94

53 Eichengreen, B. (2009) ‘Can an Asian Monetary Fund accomplish what the IMF can’t?’, Taipei Times. 27 June [Online]. Available at: http://www.taipeitimes.com/News/editorials/archives/2009/06/27/2003447209 (Accessed: 19 August 2011). 54Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011). 55 Ariff, M. (2010) ‘Asia's obligations in the new order’, New Straits Times. 15 April [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 56 Ibid. 57 Grimes, W.W. (2011) ‘The Asian Monetary Fund Reborn?: Implications of Chiang Mai Initiative Multilateralization’, Asia Policy, 11, January. Available at: http://www.nbr.org/publications/element.aspx?id=484 (Accessed: 19 August 2011). 58 Eichengreen, B. (2009) ‘Can an Asian Monetary Fund accomplish what the IMF can’t?’, Taipei Times. 27 June [Online]. Available at: http://www.taipeitimes.com/News/editorials/archives/2009/06/27/2003447209 (Accessed: 19 August 2011). 59 Ibid. 60 Ibid. 61 Lim, H. and Tay, S. (2011) ‘Does Asia need the IMF? ‘, The Jakarta Post. 7 June [Online]. Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 62 Rana, P.B. (2011) ‘Asian Monetary Fund so near yet so far’, The Korea Herald. 28 May [Online]. Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 63 Chabchitrchaidol, A. (2011) ‘Thailand: Are We a Step Closer to an Asian Monetary Fund?’, Thai News Service. 11 May [Online]. Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 64 Lim, H. and Tay, S. (2011) ‘Does Asia need the IMF? ‘, The Jakarta Post. 7 June [Online]. Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 65 Rana, P.B. (2011) ‘Asian Monetary Fund so near yet so far’, The Korea Herald. 28 May [Online]. Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 66Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011). 67Samboh, E. (2011) ‘ASEAN's AMRO may 'replace' IMF financial role’, The Jakarta Post. 8 April [Online]. Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 68Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011).

95

69 Rahil, S. (2011) ‘New E. Asian financial body expected to be Asian IMF’, Kyodo News. 4 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 70 Ibid. 71 Ibid. 72 Ibid. 73 Shrestha, O. (2011) ‘It's time for major reforms at IMF’, Business Times Singapore. 23 June [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 18 August 2011). 74Samboh, E. (2011) ‘ASEAN's AMRO may 'replace' IMF financial role’, The Jakarta Post. 8 April [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 75 Rana, P.B. (2011) ‘Asian Monetary Fund so near yet so far’, The Korea Herald. 28 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 76 Chabchitrchaidol, A. (2011) ‘Thailand: Are We a Step Closer to an Asian Monetary Fund?’, Thai News Service. 11 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 77 Rana, P.B. (2011) ‘Asian Monetary Fund so near yet so far’, The Korea Herald. 28 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 78 Rahil, S. (2011) ‘New E. Asian financial body expected to be Asian IMF’, Kyodo News. 4 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 79 Chabchitrchaidol, A. (2011) ‘Thailand: Are We a Step Closer to an Asian Monetary Fund?’, Thai News Service. 11 May [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 80 Ibid. 81 Ibid. 82 Rahil, S. (2011) ‘New E. Asian financial body expected to be Asian IMF’, Kyodo News. 4 May [Online]. Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 83 Rowley, A. (2011) ‘Japan's timely call to brace for fresh shocks’, Business Times Singapore. 23 February [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 84 Ibid. 85 Ibid. 86 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at:

96

http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011). 87 Menon, R. (2011) Resilience, Integration, Opportunity: The ASEAN Story. [Opening Address at the Merrill Lynch Asian Stars Conference 2011]. 18 May. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Address_by_Mr_Ravi_Menon_Managing_Director_MAS_at_the_Merrill_Lynch_Asian_Stars_Conference_2011_Resilience_Integration_Opportunity_The_ASEAN_Story.html (Accessed: 18 August 2011). 88 Ibid. 89 Ibid. 90 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at: http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011). 91 Ibid. 92Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011). 93 Bangkok Post (2010) ‘One for the money’, Bangkok Post. 3 October [Online] Available at http://global.factiva.com/ha/default.aspx (Accessed: 19 August 2011). 94 Ibid. 95Rana, P.B. (2011) Asian Monetary Fund: Journey is getting shorter. 20 May. Available at: http://www.voxeu.org/index.php?q=node/6534 (Accessed: 19 August 2011). 96 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at: http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011). 97 Ibid. 98 Ibid. 99 Ibid. 100 Ibid. 101 Menon, R. (2011) Resilience, Integration, Opportunity: The ASEAN Story. [Opening Address at the Merrill Lynch Asian Stars Conference 2011]. 18 May. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Address_by_Mr_Ravi_Menon_Managing_Director_MAS_at_the_Merrill_Lynch_Asian_Stars_Conference_2011_Resilience_Integration_Opportunity_The_ASEAN_Story.html (Accessed: 18 August 2011). 102 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at: http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011).

97

103 Menon, R. (2011) Resilience, Integration, Opportunity: The ASEAN Story. [Opening Address at the Merrill Lynch Asian Stars Conference 2011]. 18 May. Available at: http://www.mas.gov.sg/news_room/statements/2011/Opening_Address_by_Mr_Ravi_Menon_Managing_Director_MAS_at_the_Merrill_Lynch_Asian_Stars_Conference_2011_Resilience_Integration_Opportunity_The_ASEAN_Story.html (Accessed: 18 August 2011). 104 Ibid. 105 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at: http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011). 106 Ibid. 107 Ng, N.S. (2011) Welcome Address by Mr Ng Nam Sin, Assistant Managing Director, Monetary Authority of Singapore [Welcome Address at the Clearstream's 2nd Global Securities Financing Conference Asia]. 31 March. Available at: http://www.mas.gov.sg/news_room/statements/2011/2nd_Global_Securities_Financing_Conference_Asia_Welcome_Address_by_Mr_Ng_Nam_Sin_AMD_MAS.html (Accessed: 12 August 2011). 108 Singapore. Monetary Authority of Singapore (2008) ASEAN Agrees on Common Standards for Cross-border Offerings of Securities. [Press Release]. 8 October. Available at: http://www.mas.gov.sg/news_room/press_releases/2008/ASEAN_Agrees_on_Common_Standards_for_Crossborder_Offerings_of_Securities.html (Accessed: 16 August 2011). 109 Singapore. Monetary Authority of Singapore (2007) Asian Financial and Monetary Integration Challenges and Prospects. December. Available at: http://www.mas.gov.sg/publications/research_papers/index.html (Accessed: 16 August 2011). Appendix: Innovation & Liberalisation – Views of the 3 jurisdictions 1 Liu, M. (2008) Addressing Challenges and Promoting Innovation: The Role of Regulators [Speech at the Caijing Magazine Annual Meeting] . 13 December. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=200812231AEA0DDAE8588812FF832957DA434400 (Accessed: 18 July 2011). 2 Liu, M. (2009) Chairman LIU Mingkang’s speech [Speech at 2009 Lujiazui Forum]. 15 May. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=2009071386EA61D21A184819FF6EE52A4EDA1200 (Accessed: 18 July 2011). 3 Ibid. 4 Liu, M. (2010) Chinese Bankers Carry Hopes for Future Balances. [Keynote speech at Asian Financial Forum in Hong Kong SAR] 20 January. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=2010012011DA7AE6925E5D48FF76107FF744C800 (Accessed: 14 July 2011).

98

5 Cai, E. (2009) Vice Chairman CAI Esheng’s Speech [Speech at the 2009 China M&A Annual Conference] 23 June. Available at: http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=200907068AF89FA6D3A8FA81FF824019031CE600 (Accessed: 17 July 2011). 6 Ibid. 7 York, N. (2011) ‘Interview: Martin Wheatley, incoming UK conduct head’, GFS News. 11 May [Online]. Available at: http://www.gfsnews.com/article/1808 (Accessed: 25 August 2011). 8 Ibid. 9 Ma, W. (2011) ‘A Transitional Period in the Banking Sector’, Caijing Magazine. 26 January [Online]. Available at: http://english.caijing.com.cn/2011-01-26/110628804.html (Accessed: 18 July 2011). 10 PricewaterhouseCoopers and China Banking Association (2010) ‘Chinese Bankers Survey 2010 Executive Summary Oct 2010’, PricewaterhouseCoopers China [Online]. Available at: http://www.pwccn.com/webmedia/doc/634236143659676657_bcm_cn_bankers_survey_oct2010.pdf (Accessed: 19 July 2011). 11 Yam, J. (2009) Speech at the Joint HKAB – HKIB Dinner in honour of Mr Joseph Yam's retirement as Chief Executive of the Hong Kong Monetary Authority [Speech at 2009 Joint HKAB-HKIB Dinner]. 28 September. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090928e1.htm (Accessed: 4 August 2011). 12 Chan, N. (2011) Universal Banking - Hong Kong's Perspective [Summit opening session keynote address at The Asian Banker Summit 2011]. 7 April. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/norman/20110407e1.htm (Accessed: 4 August 2011). 13 Ibid. 14 Yam, J. (2009) Welcome Address by Joseph Yam, Chief Executive, Hong Kong Monetary Authority [Speech at SIBOS 2009]. 14 September. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090914e1.htm (Accessed: 4 August 2011). 15 Yam, J. (2009) Speech at the Joint HKAB – HKIB Dinner in honour of Mr Joseph Yam's retirement as Chief Executive of the Hong Kong Monetary Authority [Speech at 2009 Joint HKAB-HKIB Dinner]. 28 September. Available at: http://www.info.gov.hk/hkma/eng/speeches/speechs/joseph/20090928e1.htm (Accessed: 4 August 2011). 16 Ibid. 17 Stein, P. (2010) ‘The View from Hong Kong: For a former regulator, danger is in overregulation’, The Wall Street Journal Asia. 29 March [Online]. Available at: http://global.factiva.com/ha/default.aspx (Accessed: 4 August 2011).

99

18 Ibid. 19 Ibid. 20 Ibid. 21 Menon, R. (2011) A New Financial Landscape: Rebalancing on Three Fronts [Opening Address at the Inaugural Sim Kee Boon Institute Annual Conference on Financial Economics] 5 May. Available at: http://www.mas.gov.sg/news_room/statements/2011/A_New_Financial_Landscape_Rebalancing_on_Three_Fronts_Ravi_Menon_MD_MAS_Opening_Address_at_the_Inaugural_Sim_Kee_Boon_Institute_Annual_Conference_on_Financial_Economics.html (Accessed: 12 August 2011). 22 Ibid. 23 Ibid. 24 Ibid. 25 Ibid. 26Ibid. 27 Ibid.