Monetary Authority of Singapore Rep… · terrorism Financing 36 enhancing exchange of Information...

BAnnual Report 2014/15

Monetary Authority of SingaporeAnnuAl RepoRt 2014/15

DAnnual Report 2014/15

C Monetary Authority of Singapore

Monetary Authority of SingaporeAnnuAl RepoRt 2014/15

Contents05 Chairman’s Message

08 Board of Directors

10 Management Team

11 Governance Structure

12 Board Committees

13 Organisational Structure

14 Key Economic and Financial Statistics

16 Number of Financial Institutions in Singapore

ANChOr OF ECONOMIC AND FINANCIAl STABIlITy

20 the eConomy

20 uneven Recovery in the Global economy

20 G3 Growth led by the uS

20 Modest Growth in Asia ex-Japan

21 Financial Vulnerabilities and Risks Remained

21 Global Inflation Subdued

22 Growth Slowed in Singapore

23 Inflation Eased on Lower Oil Prices

24 monetary PoliCy

24 manaGement oF liQuiDity

24 enhancing RMB liquidity provision

24 Broadening Range of eligible Collateral at MAS’ liquidity Facilities

26 manaGement oF oFFiCial ForeiGn reserves

rOBuST, TruSTED, DyNAMIC AND PurPOSEFul FINANCIAl CENTrE

30 a robust FinanCial Centre

30 Industry tests

30 Banking

31 Securities, Futures and over-the-Counter Derivatives

33 Insurance

33 International Supervisory Cooperation

34 enforcement

35 a trusteD FinanCial Centre

35 Financial Benchmarks

35 preventing Money laundering and terrorism Financing

36 enhancing exchange of Information on tax

37 a DynamiC anD PurPoseFul FinanCial Centre

37 Attracting Institutional Investors

37 enhancing Risk Management ecosystem

37 Box 1: Insurance Vision 2020

38 Box 2: ongoing efforts to Develop a Robust RMB ecosystem

39 enhancing the RMB ecosystem

39 Strengthening Capital Market linkages and Increasing product Diversity

40 Box 3: Growth of Singapore’s International Financial Centre

41 Developing Globally Competitive talent for the Future

41 Harnessing technology and Innovation for Future Growth

SErvING ThE PuBlIC, ENGAGING STAKEhOlDErS

44 servinG the PubliC

44 Managing Dollars and Cents

45 Singapore Savings Bonds

45 MoneySenSe

46 Box 4: Delivering Financial education through the Institute for Financial literacy

48 enhancing Stakeholder engagement

48 ProteCtinG Consumers

48 Financial Advisory Industry Review

50 enhancing prospectus Disclosure Rules for Securities offers

50 encouraging prudent Borrowing and lending Behaviour

50 PartnerinG aCaDemia

51 Box 5: Inaugural Asian Monetary policy Forum

vAluED PArTNEr ON ThEINTErNATIONAl FrONT

56 international FinanCe

56 promoting Global Growth and Stability

56 International Financial Regulatory Reforms

57 Box 6: MAS lecture

58 reGional Forums

58 ASeAn Cooperation

58 ASeAn+3

59 Executives’ Meeting of East Asia-Pacific Central Banks

59 Asia Region Funds passport

59 IMF-Singapore Regional training Institute

59 teChniCal CooPeration

59 Regional and Bilateral training

60 Box 7: MAS-temasek Foundation Regional training programme

ONE MAS: INTEGrATED ANDCOhESIvE

64 risK manaGement anD business Continuity

64 Controls anD oPerations

64 Audit Assurance

64 procurement Management

64 Security and Fire Safety

65 Building Services and Infrastructure

65 enhanCinG ProDuCtivity anD builDinG CaPabilities

65 Staff Mobility and productivity

65 Reinforcement of MAS’ It Security Infrastructure

65 Data Governance and Analytics

65 builDinG a stronG mas Family

65 leadership Development

66 Functional and General training

66 Attachments and Secondments

66 Recognition of Staff

67 tribute to Mr lee Kuan Yew

67 Bringing our people Closer

70 Box 8: SG50 Celebrations in MAS

73 FinanCial statements

105 statistiCal anneXes

124 Glossary

4 Monetary Authority of Singapore

What We Do

our mission is to promote sustained non-inflationary economic growth, and a sound and progressive financial centre

MAS’ Functions• to act as the central bank of Singapore,

including the conduct of monetary policy, the issuance of currency, the oversight of payment systems and serving as banker to and financial agent of the Government

• to conduct integrated supervision of financial services and financial stability surveillance

• To manage the official foreign reserves of Singapore

• to develop Singapore as an international financial centre

5Annual Report 2014/15

Chairman’s MeSSAGe

the policies and operations of the MAS take place in the context of a moderate expansion of both the global and Singapore economies, a relatively soft domestic inflation outlook, and continued strength and new opportunities in the financial sector.

the global economy is expected to grow modestly in 2015, underpinned by a firmer expansion in the advanced economies. In the uS, the Fed is moving closer towards the process of monetary policy normalisation, amid an improving economic outlook. the eurozone economy is seeing gradual improvement, while economic activity in Japan is recovering as the drag from the consumption tax hike dissipates. China’s growth is likely to continue moderating alongside ongoing structural reforms. the rest of Asia should benefit from improvements in exports and lower oil prices.

Against this backdrop, the Singapore economy is expected to expand at a moderate pace of 2–4% this year, in line with its medium-term potential of 3% on average. Gradual improvement in the global economy will provide some upside to Singapore’s external-oriented industries, while domestic services industries are likely to stay resilient.

Inflation is expected to ease this year, following higher than usual price increases during 2010 to 2013. MAS Core Inflation, which excludes the costs of accommodation and private road transport, is anticipated to be significantly lower than in recent years, as the decline in global oil prices and enhanced government healthcare subsidies filter through more significantly to domestic prices. Coupled

with disinflationary effects from a higher expected supply of Certificates of entitlement and housing, CpI-All Items inflation will likely show a further decline in 2015. nonetheless, the labour market is at full employment and will remain tight. this should in turn support wage growth and some pass-through of cost pressures, while improvements in productivity take time to materialise.

In January 2015, MAS reduced the slope of the S$ nominal effective exchange rate policy band, while maintaining the band on a modest and gradual appreciation path. this was a measured step, in line with the more benign inflation outlook. the policy stance was subsequently affirmed in April 2015. MAS remains vigilant in ensuring that cost pressures are contained over the medium term and inflation expectations are well-anchored.

earlier this year, MAS published a framework for identifying and supervising domestic systemically important banks. the framework allows MAS to identify banks that can have a significant impact on the stability of the financial system and apply additional supervisory measures to strengthen their ability to withstand various shocks. MAS is also reviewing the risk-based capital framework for insurance companies. the review aims to make the framework more risk sensitive and comprehensive.

“the Singapore economy is expected to expand at a moderate pace of 2–4% this year, in line with its medium-term potential of 3% on average.”


In the face of growing concerns globally about cyber security, MAS partnered the Association of Banks in Singapore to test the security of key IT systems at major financial institutions. A business continuity exercise based on a cyber-attack scenario was also held, with participants from the banking, insurance and capital market sectors. these exercises helped to strengthen the financial industry’s readiness to manage multiple and concurrent cyber-attacks that could disrupt critical systems or result in data loss.

MAS and the Singapore exchange announced several measures to strengthen Singapore’s securities market structure and practices. these include introducing requirements for a minimum trading price, collateral for securities trading, and reporting short selling of securities and publishing aggregate short positions.

to deliver more effective enforcement outcomes, MAS and the Commercial Affairs Department have commenced joint investigations of market misconduct offences such as insider trading and market manipulation.

over the past year, MAS introduced for public consultation a range of proposals aimed at safeguarding investors’ interests, and expanding their savings and investment options. We proposed guidelines on good drafting practices for prospectuses to help retail investors better understand the information contained in them. In the fixed-income market, MAS proposed refinements to the current rules to make it easier for eligible corporates to offer bonds to retail investors. together with the Government, MAS introduced the Singapore Savings Bonds programme to provide individuals with a safe, long-term savings option.

MAS launched compareFIRSt, an interactive web portal that allows consumers to compare similar life insurance products offered by

different insurance companies in Singapore, and make more informed decisions when buying life insurance policies. MAS also worked with the insurance industry to introduce direct purchase insurance, a class of simple life insurance products that is sold without financial advice. they are cheaper than comparable life insurance products as no commissions are charged.

MAS also put in place new unsecured credit rules to encourage financial prudence amongst borrowers and prudent lending practices by financial institutions. the new rules require financial institutions to ask borrowers for their preferred credit limits and seek their consent in writing before any credit limit increase is granted. Financial institutions are also required to make a holistic assessment of borrowers’ repayment capacity, total credit limits and aggregate outstanding debt balances across all financial institutions.

“together with the Government, MAS introduced the Singapore Savings Bonds programme to provide individuals with a safe, long-term savings option.”

Chairman’s messaGe

The financial sector has done well over the last year. We continue to see broad-based growth across the banking, insurance, capital market, asset and wealth management industries, and Singapore has established itself as the second largest offshore RMB centre globally. MAS will work with the industry to strengthen capital market infrastructure and connectivity, facilitate the flow of long-term funds to support the infrastructure needs of the region, and deepen our RMB ecosystem.

to strengthen the pillars for long term growth, MAS will invest in developing financial sector capabilities on two broad fronts: SkillsFuture and Fintech.


SkillsFuture will focus on deepening skills at all levels of the financial sector workforce, and preparing for future needs in a rapidly changing global and local financial landscape. MAS is working closely with the financial industry, institutes of higher learning, and training providers to ensure a strong pipeline of Singaporean talent for the financial sector, and help existing professionals upgrade and develop new capabilities as job roles evolve.

the Fintech agenda seeks to spur innovation, increase productivity, and enhance customer service through the pervasive use of technology. MAS aims to create a vibrant Fintech ecosystem through industry collaborations in areas such as data analytics and digital payments, encouraging financial institutions to set up innovation laboratories in Singapore to test-bed solutions, and providing a conducive regulatory environment for innovation.

“SkillsFuture will focus on deepening skills at all levels of the financial sector workforce, and preparing for future needs in a rapidly changing global and local financial landscape.”

this year marks Singapore’s 50th year as a nation. our success as a trusted, robust, and dynamic international financial centre has only been possible through an active partnership between MAS and the financial industry. MAS has also collaborated with other Government agencies in ensuring effective macroprudential policies, especially aimed at stabilising the property market. I would like to thank all our partners for their support.

tharman shanmugaratnamChairman


boarD oF DIReCtoRS

tharman shanmugaratnam ChairmanDeputy prime Minister Minister for Finance

lim hng KiangDeputy ChairmanMinister for trade and Industry

heng swee KeatMinister for education

lawrence Wong shyun tsaiMinister for Culture, Community and YouthSecond Minister for Communications and Information

Quek see tiatChairman of Audit CommitteeChairman, Building and Construction Authority

lim Chee onnChairman of Risk Committee Senior International Advisor, Singbridge private ltd


ravi menonManaging Director, Monetary Authority of Singapore

Peter ong boon Kweepermanent Secretary,Ministry of Finance

v K rajahAttorney-General,Attorney-General’s Chambers

tan Chorh Chuanpresident,national university of Singapore

Goh Chok tongemeritus Senior Minister

SENIOr ADvISOr TO MAS


manaGement teAM

a. ravi menon managing Director

b. ong Chong tee Deputy managing Director Financial Supervision

C. Jacqueline loh Deputy managing Director Monetary policy & Investment

/ Development & International

D. andrew Khoo Deputy managing Director Corporate Development

e. Chia Der Jiun assistant managing Director Markets & Investment

F. Chua Kim leng assistant managing Director Banking & Insurance

G. lee boon ngiap assistant managing Director Capital Markets

h. leong sing Chiong assistant managing Director Development & International

i. low Kwok mun assistant managing Director Finance, Risk and Currency

J. ng nam sin assistant managing Director Corporate, HR & It Services

K. edward robinson assistant managing Director and Chief economist economic policy l. Wong nai seng assistant managing Director policy, Risk & Surveillance

IK

C

e

ABD

H l JG

F


GovernanCeStRuCtuRe

the Board is responsible for the high-level governance of MAS. the Board Committees exercise broad oversight and approve major changes to policies and strategies relating to the principal functions of MAS. the Managing Director is responsible for the day-to-day operations of MAS and is assisted by various groups and management committees within

MAS Board

Monetary and Investment

policy Meeting

Chairman’s Meeting

Risk Committee

StaffCommittee

Audit Committee

executive Committee

Management Committee

Financial Stability

Committee

Financial Supervision Committee

Development and

International Committee

Markets and Investment Committee

payment and

Settlement Committee

DataCommittee

MAS-CADJoint

Investigationpanel

It SteeringCommittee

Staff Committee I

Human Resource

Committee

Staff Committee II

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

Board and Board Committees

Management Committees

payment Systems andtechnology

DevelopmentSteeringGroup


boarD CoMMItteeS

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

Chairman’s meetinG the Chairman’s Meeting approves major changes to MAS’ supervisory policies and regulatory

framework. It also approves major changes to policies and strategies relating to financial centre development, and international and regional relations. the Chairman’s Meeting comprises tharman Shanmugaratnam (Chairman), lim Hng Kiang, Heng Swee Keat, lawrence Wong and Ravi Menon.

monetary anD investment PoliCy meetinG the Monetary and Investment policy Meeting deliberates and decides on issues relating to the formulation and implementation of monetary policy with the objective of maintaining price stability for sustainable economic growth. the Meeting also oversees the investment of MAS’ reserves. the Monetary and Investment policy Meeting comprises tharman Shanmugaratnam (Chairman), lim Hng Kiang, Heng Swee Keat, lawrence Wong and Ravi Menon.

auDit Committee The Audit Committee provides an independent assessment of MAS’ internal controls and financial reporting process. the Committee also reviews the efforts of MAS’ internal and external auditors. the Audit Committee comprises Quek See tiat (Chairman), peter ong and tan Chorh Chuan.

risK Committee the Risk Committee oversees the MAS-wide risk management framework, and reviews MAS’ risk management policies and processes for reporting of risks. the Risk Committee comprises lim Chee onn (Chairman), tan Chorh Chuan, V K Rajah and Ravi Menon.

staFF Committeethe Staff Committee approves MAS’ key personnel policies, including overall pay policy. It also approves matters relating to the appointment, promotion and remuneration of senior management staff. the Staff Committee comprises tharman Shanmugaratnam (Chairman), lim Hng Kiang, Heng Swee Keat and Ravi Menon.

As at 1 July 2015


orGanisationalStRuCtuRe

MONETAry POlICy & INvESTMENT / DEvElOPMENT & INTErNATIONAlJacqueline loh Deputy Managing Director

ECONOMIC POlICyedward robinson Assistant Managing Director and Chief economist

Economic AnalysisChoy Keen mengprincipal economist

Economic Surveillance & ForecastingCeline siaexecutive Director

Special Projectsng bok eng executive Director

MArKETS & INvESTMENTChia Der JiunAssistant Managing Director

Monetary & Domestic Markets ManagementCindy mok Director

reserve Managementbenny Cheyexecutive Director

DEvElOPMENT & INTErNATIONAlleong sing Chiong Assistant Managing Director

Financial Centre DevelopmentCarolyn neo Director

Financial Markets Developmentbernard Weeexecutive Director

Internationalvalerie tayexecutive Director

FINANCIAl SuPErvISIONong Chong teeDeputy Managing Director

BANKING & INSurANCEChua Kim lengAssistant Managing Director

Banking Department Iloo siew yeeexecutive Director

Banking Department IItan Keng heng Director

Banking Department IIItai boon leongexecutive Director

Insurancelee Keng yiDirector

Chief ExaminerWan aik Chye

CAPITAl MArKETSlee boon ngiapAssistant Managing Director

Capital Markets Intermediaries Imerlyn eeexecutive Director

Capital Markets Intermediaries IIlim Cheng KhaiDirector

Capital Markets Intermediaries IIIKoh hong engDirector

Market ConductPaul yuenexecutive Director

Markets Policy & Infrastructureng yao loongexecutive Director

POlICy, rISK & SurvEIllANCEWong nai sengAssistant Managing Director

Prudential Policylim tuang lee executive Director

Specialist riskho hern shinexecutive Director

Macroprudential Surveillancelam san lingexecutive Director

COrPOrATE DEvElOPMENTandrew KhooDeputy Managing Director

COrPOrATE, hr & IT SErvICESng nam sinAssistant Managing Director

Corporate Servicesbernard yeoexecutive Director

Information Technologylawrence angexecutive Director

human resourceluz Fooexecutive Director

MAS Academyng nam sinAssistant Managing Director

FINANCE, rISK & CurrENCylow Kwok munAssistant Managing Director

Financeteo Kok mingexecutive Director

risk ManagementDaniel Wangexecutive Director

CurrencyChung Wei Kenexecutive Director

As at 1 July 2015

ravi menonManaging Director

MANAGING DIrECTOr’S OFFICE

legalng heng FattGeneral Counsel

Corporate Planning and Communicationsmerlyn eeexecutive Director

Internal Audittimothy ngexecutive Director


Key eConomiCAnD FInAnCIAl StAtIStICS

2010 2011 2012 2013 2014

National Income AggregatesGross Domestic product At Current Market prices (S$m) 322,361.1 346,353.5 362,332.5 378,200.3 390,089.1 Growth Rate (% change) 15.2 7.4 4.6 4.4 3.1 At 2010 Market prices (S$m) 322,361.1 342,371.5 354,061.3 369,793.0 380,585.0 Growth Rate (% change) 15.2 6.2 3.4 4.4 2.9 Gross national Income At Current Market prices (S$m) 320,526.6 338,452.8 351,765.9 366,618.4 378,329.7 Growth Rate (% change) 20.1 5.6 3.9 4.2 3.2

labour Forceunemployment Rate (%) 2.2 2.0 2.0 1.9 2.0 productivity Growth (% change) 11.6 2.3 -0.5 0.3 -0.8 Changes in employment ('000) 115.9 122.6 129.1 136.2 130.1 Average Monthly earnings (% change) 5.6 6.0 2.3 4.3 2.3 unit labour Cost (% change) -3.3 1.7 3.1 2.4 3.5

Savings and Investment Gross national Savings (S$m) 166,120.1 170,571.2 170,867.0 177,335.1 182,278.9 As % of GnI 51.8 50.4 48.6 48.4 48.2 Gross Domestic Capital Formation (S$m) 89,841.2 94,398.9 108,666.2 109,660.4 107,812.1 As % of GnI 28.0 27.9 30.9 29.9 28.5

Balance of Payments (S$m)Goods Balance 85,682.2 89,990.5 84,336.5 93,223.6 96,757.7 exports of Goods 504,848.8 547,963.2 549,051.9 552,651.0 554,044.0 Growth Rate (% change) 20.8 8.5 0.2 0.7 0.3 Imports of Goods 419,166.6 457,972.7 464,715.4 459,427.4 457,286.3 Growth Rate (% change) 20.2 9.3 1.5 -1.1 -0.5 Services and other Balances -9,403.3 -13,818.1 -22,135.7 -25,548.9 -22,290.9 Current Account Balance 76,278.9 76,172.4 62,200.8 67,674.7 74,466.8 As % of GnI 23.8 22.5 17.7 18.5 19.7 Capital and Financial Account Balance -24,920.6 -55,878.6 -28,466.2 -45,136.1 -62,864.4 Balancing Item 6,122.2 1,193.9 -1,128.7 192.3 -2,984.6 overall Balance 57,480.5 21,487.7 32,605.9 22,730.9 8,617.8 Official Foreign Reserves 288,954.1 308,403.2 316,744.2 344,729.2 340,438.1

Inflation (% change)Consumer price Index 2.8 5.2 4.6 2.4 1.0 GDP Deflator 0.0 1.2 1.2 -0.1 0.2

Monetary Aggregates (% change)M1 20.3 16.1 7.7 9.9 3.6 M2 8.6 10.0 7.2 4.3 3.3 M3 8.3 10.1 7.6 4.3 3.4


2010 2011 2012 2013 2014

Interest rates (period average, % per annum)prime lending Rate 5.38 5.38 5.38 5.38 5.35Banks' 3-month Fixed Deposit Rate 0.21 0.17 0.14 0.14 0.143-month S$ SIBoR 0.56 0.41 0.39 0.38 0.413-month uS$ lIBoR 0.34 0.34 0.43 0.27 0.23

Exchange rates (period average, S$ per)uS Dollar 1.3635 1.2579 1.2497 1.2513 1.2671 pound Sterling 2.1073 2.0161 1.9803 1.9573 2.0873 euro 1.8095 1.7495 1.6071 1.6621 1.6837 100 Japanese Yen 1.5543 1.5780 1.5672 1.2840 1.1996 Malaysian Ringgit 0.4234 0.4111 0.4046 0.3973 0.3873

Banking and FinanceCommercial Banks' Assets/

liabilities (S$m)781,607.4 855,811.4 911,009.0 973,217.3 1,059,641.7

Growth Rate (% change) 10.6 9.5 6.4 6.8 8.9

Finance Companies' Assets/ liabilities (S$m)

11,523.6 12,165.3 14,967.5 14,985.7 15,975.7

Growth Rate (% change) -1.4 5.6 23.0 0.1 6.6

Merchant Banks' Assets/ liabilities (S$m)

89,760.3 87,851.1 92,411.0 84,944.9 96,256.8

Growth Rate (% change) 17.6 -2.1 5.2 -8.1 13.3

Asian Currency units' Assets/ liabilities (uS$m)

971,299.4 1,019,532.9 1,093,264.6 1,180,620.2 1,190,629.2

Growth Rate (% change) 11.7 5.0 7.2 8.0 0.8

Insurancelife Insurers' Assets/liabilities (S$m) 131,903.7 133,905.4 148,592.5 153,208.7 168,795.7 Growth Rate (% change) 10.0 1.5 11.0 3.1 10.2

General Insurers' Assets/liabilities (S$m) 17,431.6 27,209.4 26,267.6 26,484.0 28,606.2 Growth Rate (% change) 9.6 56.1 -3.5 0.8 8.0

CPFexcess of Contributions over

Withdrawals (S$m)12,374.2 14,184.8 14,321.6 13,666.8 12,423.3

Domestic Capital Market net Funds Raised in Domestic

Capital Market (S$m)62,296.5 82,763.7 78,664.9 100,252.1 96,566.1

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


number oF FinanCial institutionsIn SInGApoRe

31 March 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Banks 108 108 113 114 120 120 123 123 124 126local1 5 5 6 6 7 6 6 6 5 5 Foreign 103 103 107 108 113 114 117 117 119 121 Full banks 24 24 24 27 25 26 26 27 28 28 Wholesale banks2 34 36 42 41 46 50 52 53 55 56 offshore banks 45 43 41 40 42 38 39 37 36 37

(Banking offices including head offices and main offices) (397)

(399) (408) (409) (421) (428) (432) (425) (449) (432)

Asian Currency units 151 154 158 161 162 163 165 161 159 160Banks 104 106 111 112 117 117 120 120 121 123Merchant banks 47 48 47 49 45 46 45 41 38 37

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

(39) (39) (39) (39) (39) (39) (39) (39)

(39) (39)

Merchant Banks 48 49 49 50 46 47 46 42 39 38

Insurance Companies 149 153 151 158 158 157 164 168 177 181Direct insurers 56 61 59 62 64 63 70 72 79 80Reinsurers 28 27 25 27 26 28 29 28 31 31Authorised reinsurers 5 5 5 6 6 6 6 6 6 6Captive insurers 60 60 62 63 62 60 59 62 61 64

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

Representative Offices 42 43 45 36 32 37 38 40 37 38Banks 42 43 45 36 30 34 36 38 36 38Merchant banks - - - - - - - - - -Insurance3 - - - - 2 3 2 2 1 1

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


1 Local banks comprise five full banks. 2 Previously known as restricted banks. 3 Data is unavailable for the period between 2004 and 2009. 4 Regulation of real estate investment trust management came into effect on 1 August 2008. 5 Regulation of credit rating services came into effect on 17 January 2012. 6 Regulation of trust companies came under the purview of MAS when the Trust Companies Act came into effect

on 1 February 2006. 7 Registration of fund management companies commenced under an enhanced regulatory regime which came into effect on 7 August 2012.

31 March 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

licensed Financial Advisers 61 67 69 73 71 67 67 62 58 60

Capital Markets Services licensees

171 183 215 221 224 251 250 295 443 493

Dealing in Securities 72 77 93 90 99 98 94 106 118 123trading in Futures Contracts

38 40 46 50 48 47 50 52 59 60

Advising on Corporate Finance

33 36 37 37 34 33 34 37 40 42

Fund Management 92 97 110 113 107 118 119 158 289 335leveraged Foreign exchange trading

13 14 18 19 19 19 20 23 24 24

Securities Financing 16 15 16 16 17 18 17 17 17 17providing Custodial Services for Securities

31 34 38 40 39 40 40 38 37 37

Real estate Investment trust Management4

- - - 1 7 22 23 26 31 34

providing Credit Rating Services5

- - - - - - - 3 3 4

licensed Trust Companies6 - 31 35 38 40 48 50 51 52 54

registered Fund Management Companies7

- - - - - - - 74 236 275


Anchor oFEconoMic

AnD FinAnciAl StAbility


ThE ECONOMy

uNEvEN rECOvEry IN ThE GlOBAl ECONOMy the global economy expanded at a slightly stronger pace of 4.1% in 2014, compared to 3.9% in the preceding year. However, growth was uneven across the major economies. While the united States (uS) emerged from a weather-related contraction in Q1 to register robust expansion for the rest of the year, activity in the eurozone and Japan was subdued and only picked up in the last quarter. In Asia ex-Japan, firm domestic demand helped to support most economies in the region and cushion the impact of slower export growth.

With signs of a broad-based recovery taking hold, underpinned by strong employment, the uS Federal Reserve ended its quantitative easing (Qe) programme in october 2014 and signalled its intention to normalise interest rates sooner. In contrast, subdued growth and inflation—the latter due mainly to the fall in oil prices—spurred the eurozone and Japan to implement their most aggressive monetary easing to date. the european Central Bank (eCB) began targeted longer-term refinancing operations in September 2014 and full-fledged QE in March 2015, while the Bank of Japan embarked on a second round of Qe in october 2014.

G3 GrOWTh lED By ThE uS

the uS economy rebounded in 2014, with GDp growth rising to 2.4% from 2.2% in the previous year, supported by a virtuous cycle of mutually- reinforcing business activity and household demand. Diminishing spare capacity and a still-accommodative monetary policy environment contributed to an increase in capital expenditure,

anChor oF eConomiC AnD FInAnCIAl StABIlItY

while stronger employment growth and the recent decline in energy prices boosted consumer spending. Alongside rising household formation, the housing market also saw signs of a stronger revival last year. even so, in Q1 2015, particularly bad weather, coupled with port closures on the West Coast, disrupted economic activity and contributed to a fall in GDp of 0.2% on a q-o-q seasonally adjusted annualised rate (SAAR) basis. After two years of mild contraction, the eurozone returned to growth in 2014, with a full-year expansion of 0.9%. While private consumption recovered modestly and the pace of fiscal consolidation slowed, private investment did not pick up as strongly as expected. Growth was also uneven across the region—even as Italy remained in recession with a contraction of 0.4%, Germany posted relatively more robust growth of 1.6%. Growth momentum continued into 2015, with the region as a whole expanding by a further 1.6% in Q1, on a q-o-q SAAR basis. Japan’s GDp declined by 0.1% in 2014, following a 1.6% expansion in the previous year, as the consumption tax hike implemented in April 2014 led to a sharp pullback in private consumption. Domestic demand picked up towards the end of 2014 as the effects of the tax hike began to wane, while the JpY depreciation provided a boost to exports, helping to lift the economy out of a technical recession in Q4. the recovery gained further traction in Q1 2015, with the economy expanding by 3.9% on a q-o-q SAAR basis.

MODEST GrOWTh IN ASIA EX-JAPAN

Growth in Asia ex-Japan came in at 5.2% in 2014, marginally higher compared to the preceding year. the Chinese economy continued to adjust to a slower and less investment-intensive growth path,


expanding by 7.4% in 2014, compared with 7.7% the year before. Domestic demand softened, as the country implemented structural reforms whilst also contending with a correction in the real estate market and industrial over-capacity. In the first quarter of 2015, China’s growth experienced a further step-down to 7.0% y-o-y, prompting intensified policy easing to support economic activity. notwithstanding the slowdown in China, exports of manufactures from the ASeAn-4 countries grew at a faster pace last year, supported by the moderate recovery in the advanced economies. Meanwhile, private consumption remained resilient on the back of favourable labour market conditions. However, the slump in global prices of oil and other commodities, as well as slower growth in investment spending, led to a slight easing of ASeAn GDp growth to 4.7% in 2014, compared to 4.8% in the previous year.

the northeast Asian-3 economies (neA-3) turned in a mixed performance, with a build-up in inventories driving the increase in overall growth from 2.8% in 2013 to 3.1% in 2014. the boost from an increase in exports to the G3 was offset by falling shipments to China, which reflected the NEA-3’s heavy exposure to the slowing Chinese market.

FINANCIAl vulNErABIlITIES AND rISKS rEMAINED

Global financial markets remained calm in FY2014, despite some episodes of increased volatility due to monetary policy uncertainty and the plunge in oil prices. From April 2014 to March 2015, the MSCI Asia ex-Japan index increased by 7.1%, the Standard & poor’s 500 by 9.7%, the Dow Jones eurostoxx by 15.9% and the nikkei 225 by 29.8%.

Divergent monetary policies in advanced economies led to increased currency market volatility, which affected corporates with large foreign currency borrowings. While the drop in commodity prices supported overall global growth, it also had financial stability spillover effects. For instance, such effects could occur in the high-yield corporate bond market, where many issuers were commodity-related firms. Liquidity risks persisted amidst uncertainty in financial markets and fragility of investor sentiment, exacerbating financial

market volatility. At the same time, the changing financial landscape due to the increased adoption of financial technology may give rise to new and unanticipated pockets of risk.

In the uS, economic indicators pointed to an impending interest rate hike, but uncertainty over its timing and implementation remains. In the eurozone, the comprehensive banking system assessment and strong policy initiatives by the eCB improved financial conditions. However, political uncertainties continue to pose a threat to financial stability.

uncertainty in emerging market economies increased alongside evolving global monetary conditions. the impact of divergent monetary policies in advanced economies will be closely watched, as Asian policymakers move to strengthen their economies against potentially disruptive capital flows.

In China, concerns over the build-up of local government debt and shadow banking persisted, as policymakers balance financial reforms against near-term stimulus measures to stabilise the economy and soften the impact of a cooling property market. GlOBAl INFlATION SuBDuED

Global inflation continued to be contained in 2014. Inflation in the G3 economies came in at 1.3%, unchanged from 2013. In the eurozone, inflation slipped further, in part due to labour market reforms, which resulted in downward wage adjustments. Japan’s headline inflation rate surged to 3.6% in Q2 2014 following the consumption tax hike, although it fell steadily thereafter. underlying inflation was firm in the uS, in line with the improvement in consumer and business sentiments. In Asia ex-Japan, inflation in 2014 moderated on account of lower food and fuel prices in China and India, while muted private consumption growth further dampened inflationary pressures in the neA-3. ASeAn-4 inflation increased slightly, mainly due to upward price pressures resulting from fuel subsidy adjustments in Indonesia and Malaysia, as well as supply bottlenecks in the philippines.


Global energy prices, which plunged in Q4 2014, remained low going into the first three months of 2015, leading to further disinflationary pressures in the G3 and Asia ex-Japan economies. Headline inflation in the US and the Eurozone turned mildly negative, while price pressures in Asia moderated.

GrOWTh SlOWED IN SINGAPOrE

Against the backdrop of a still-hesitant and uneven recovery across key trading partners and domestic supply-side constraints, the Singapore economy expanded by a slower 2.9% in 2014, compared with 4.4% in the preceding year (see Chart 1).

the downshift in growth in 2014 was largely on account of a moderation in the external-oriented services sectors. Weakness in the commodity space, coupled with muted global trade flows, led to a step-down in wholesale trade activities last year. Financial services also recorded a more modest outturn as loan growth to east Asia and the domestic trade-related industries abated, although the sector continued to outperform the rest of the economy. Industries dependent on domestic demand likewise slowed, in part due to weaker private sector construction and softer demand for real estate business services. In comparison, the manufacturing sector turned in a stronger performance in 2014, supported largely

anChor oF eConomiC anD FinanCial stability

by the pharmaceutical and medical technology segments.

Growth momentum eased slightly at the start of this year, with the Singapore economy recording an expansion of 3.2% q-o-q SAAR in Q1 2015, from 4.9% in the preceding quarter. the slower pace largely reflected a cyclical pullback in the financial services sector, following an exceptionally strong outturn in Q4 2014. Despite a flat manufacturing performance, trade-related services saw an uptick in activity. this, to some extent, was a result of healthy growth in electronics re-exports, given Singapore’s comparative advantage as a distribution and logistics hub that allowed it to leverage the wave of global demand for new mobile computing devices produced in the region. A rebound in residential building activities shored up growth in the domestic-oriented sectors.

looking ahead, gradual improvements in the global economy, alongside the continued expansion of the global It industry, should provide some support to Singapore’s external-oriented industries. Domestic-oriented sectors will remain resilient, underpinned by steady demand for services, such as healthcare and education. nonetheless, growth is anticipated to be moderate and uneven in light of the slowdown in China, weakness in some oil-related

Chart 1. Singapore’s real GDP Growth

YoY

QoQ SAAR

per

Cen

t

10

6

8

2

4

0

-22013 Q2 Q3 Q4 Q2 Q3 Q4 2015Q12014


segments amid the global downshift in oil and gas exploration and production, as well as domestic resource constraints. Some sectors will face continued margin pressures amid firm business costs. For 2015, the Singapore economy is projected to expand by 2–4%. over the medium term, restructuring should enable the economy to enjoy healthy and sustained growth through higher productivity. INFlATION EASED ON lOWEr OIl PrICES

MAS Core Inflation, which excludes the costs of accommodation and private road transport, rose to 1.9% in 2014, from 1.7% in 2013. this was mainly due to higher food inflation, partly on account of weather-related supply disruptions in the region and some pass-through of domestic costs to the prices of prepared meals. Services inflation eased, although the costs of some items, such as education and healthcare, continued to rise at a faster pace than overall core inflation.

CPI-All Items inflation moderated to 1.0% in 2014, from 2.4% in the preceding year as a result of the smaller rise in accommodation cost and a decline in private road transport cost, following measures by the government to cool the housing and motor vehicle markets.

Chart 2. Contribution to CPI-All Items Inflation%

Poi

nt C

ontr

ibut

ion

2013 Q2 Q3 Q4 2014 Q2 Q3 Q4 2015Q1

-1

-2

0

1

2

3

4

5

Services Food AccommodationCpI-All Items Inflation others pte Rd trpt ex-petro l

oil-Related

Both MAS Core and CPI-All Items inflation eased in Q1 2015, to 1.1% and −0.3% respectively. Following the plunge in global oil prices in late 2014, the cost of domestic oil-related items, including petrol and electricity, fell sharply. Cost pass-through also moderated given subdued domestic economic growth, while healthcare costs were lower as a result of enhanced government subsidies. Softer housing rentals and car Certificate of entitlement (Coe) premiums also continued to have a dampening effect on inflation during the quarter. looking ahead, external sources of inflation should be generally benign, given ample supply buffers for major commodities. While there is considerable uncertainty over the outlook, global oil prices for the whole of 2015 are likely to average significantly below their 2014 level. Domestic cost pass-through could be tempered by the moderate growth environment, while budgetary measures will reduce prices for some consumption items. In addition, there will be a further disinflationary effect from the expected increase in the supply of Coes and housing units. taking all these factors into account, both MAS Core Inflation and CPI-All Items inflation are expected to be lower in 2015 compared to last year.



However, the labour market remains tight, with the resident unemployment rate near to its 10-year historical low. the risk, therefore, is that underlying cost pressures could mount and the pass-through to consumer prices could pick up, especially if economic conditions become more supportive. Along with some recovery in global oil prices and the dissipation of the effects of budgetary measures, inflation could rise going into 2016.

MONETAry POlICy

the Singapore economy slowed in 2014 against the backdrop of continued, albeit uneven, growth across the major economies. Domestic supply-side constraints also capped the extent to which the external-oriented sectors benefitted from the uplift in global demand, while some of the domestic-oriented sectors that are more reliant on labour and faced greater competition also experienced profit margin pressures. While CpI-All Items inflation moderated, MAS Core Inflation stayed relatively firm over the first three quarters of 2014, as prices of food imported from the region rose amid supply disruptions and businesses passed on some of the accumulated wage costs to consumer prices.

To contain imported and domestic inflation and anchor inflation expectations, MAS kept the S$ nominal effective exchange rate (S$neeR) policy band on a modest and gradual appreciation path in April and october 2014, with no change to the slope, width or the level at which it was centred. Following the october 2014 monetary policy statement, global oil prices fell sharply in Q4. At the same time, the pass-through of accumulated business costs to consumer prices was weaker than expected, and government subsidies led to lower prices of healthcare services. this resulted in a significant downshift in the outlook for inflation, despite expectations that the economy will continue growing at a moderate pace in 2015. on 28 January 2015, MAS lowered the forecasts for CPI-All Items inflation and MAS Core Inflation for 2015, and eased monetary policy in an off-cycle

policy announcement. the S$neeR policy band was kept on a modest and gradual appreciation path, but its slope was reduced. the Singapore economy subsequently evolved as envisaged in the January announcement. Real GDp is on track to expand by 2-4% in 2015, and there have been no changes to the MAS Core and CpI-All Items inflation forecasts. Accordingly, MAS kept the monetary policy stance unchanged in April 2015. this policy stance was deemed consistent with the benign inflation outlook and moderate growth prospects for 2015, and appropriate for ensuring medium-term price stability in the economy. Chart 3 traces the evolution of monetary policy against the backdrop of changes in key macroeconomic variables in recent years.

MANAGEMENT OF lIQuIDITy

ENhANCING rMB lIQuIDITy PrOvISION

In July 2014, MAS introduced the MAS overnight RMB liquidity Facility that allows financial institutions to borrow RMB funds on an overnight basis.

The facility bolsters market confidence by providing the financial institutions with a backstop for their short-term RMB funding needs.

the facility also complements the existing MAS RMB Facility that allows banks to borrow RMB funds on a term basis (1-week, 1-month and 3-month) for trade, direct investment and market stability purposes.

BrOADENING rANGE OF ElIGIBlE COllATErAl AT MAS’ lIQuIDITy FACIlITIES

In line with the introduction of the liquidity Coverage Ratio (lCR) requirements, the range of acceptable collateral at MAS’ liquidity facilities has been expanded to include:

• AA-rated SGD bonds issued by supranationals, sovereigns, sovereign-guaranteed corporates and public sector entities; and

& Wi


Chart 3. Key Macroeconomic variables and the Monetary Policy Stance

Wide

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real GDP Growth

Output Gap

CPI-All Items Inflation

MAS Core Inflation

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ReduceSlope

Shift to Modest & Gradual

Appreciation & Re-centre

Increase Slope Slightly & Widen Band

Increase Slope Slightly & Restore narrower

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ReduceSlope

Modest & Gradual Appreciation


• AA and AAA-rated SGD bonds issued by corporates.

this enhances MAS’ ability to provide banks with liquidity and helps maintain stability in funding markets. this also increases the efficiency of banks’ balance sheet management by allowing them to hold on to a broader pool of high quality SGD securities that can be used to raise funds in times of stress.

MANAGEMENT OF OFFICIAl FOrEIGN rESErvES

As at 31 March 2015, MAS held S$341 billion (US$248 billion) of official foreign reserves (OFR) on its balance sheet. MAS invests the oFR conservatively in a well-diversified portfolio of cash, bonds and equities across advanced and emerging market economies, with investment-grade bonds in the advanced economies comprising the largest allocation in the portfolio. With regard to currency composition, about three-quarters of the oFR are denominated in the G4 currencies i.e. uSD, euR, GBp and JpY, with no single currency allocation making up more than one-third of the composition. the oFR are accounted for on a lower of cost and market valuation basis in MAS’ financial statements.

MAS’ financial results are reported in SGD. The reported value of the oFR hence depends on the movements of the SGD vis-à-vis the foreign currencies in which the reserves are held. Such currency movements will result in translation effects

in MAS’ financial statements. These translation effects have no impact on the international purchasing power of the oFR, and hence do not affect MAS’ ability to conduct exchange rate policy or provide a buffer in the event of a sharp deterioration in Singapore’s balance of payments. Accordingly, it would not be meaningful to hedge against the SGD to mitigate translation effects. Investment PerformanceChart 4 shows the investment performance of the OFR for the last five financial years. The gains/losses of oFR, as represented by the gold bars in Chart 4, comprise two separate components – investment gains/losses (blue bars) and currency translation effects (grey bars). Holding the SGD exchange rate constant to strip out translation effects, investment gains in FY2014/15 amounted to S$10.4 billion. As in previous years, the gains were mainly from interest income and realised capital gains/losses from the sale of oFR assets, and have remained relatively stable for the last five financial years.

In FY2014/15, the negative translation effect was due primarily to the strengthening of the SGD against the euR and the JpY, which was partly offset by the weakening of the SGD against the uSD. the exchange movements of the SGD against the G4 currencies for the last five financial years are shown in the table.

taking the investment gains/losses together with the currency translation effects, MAS’ annual gains/losses1 from oFR over the last five financial years ranged from –S$10.4 billion to S$16.5 billion.


1 Gross of investment, interest and other expenses.


Chart 4. Gains/losses of the OFr

2 Positive figures represent an appreciation of the SGD, while negative figures represent a depreciation of the SGD against the foreign

currency over the financial year.

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Exchange Movements of SGD against G4 Currencies (%)

SGD2 vs. Fy2010/11 Fy2011/12 Fy2012/13 Fy2013/14 Fy2014/15

uSD 11.0 0.3 1.4 -1.4 -8.3

euR 5.8 6.8 5.3 -8.3 17.6

JpY -1.6 -0.4 16.0 7.9 6.7

GBp 5.2 0.6 6.6 -10.1 3.0


Anchor oFEconoMic


robuSt, truStED,

DynAMic AnD purpoSEFul FinAnciAl

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robust, trusteD, DynamiC anD puRpoSeFul FInAnCIAl CentRe

A rOBuST FINANCIAl CENTrE

INDuSTry TESTS

Industry-Wide Stress TestsMAS conducts annual industry-wide stress tests of financial institutions in Singapore. In 2014, financial institutions were stress tested on an adverse macroeconomic scenario where uS economic growth collapses, the eurozone enters a recession and Asian economies underperform. this scenario included a sharp rise in interest rates and a large decline in property prices. the stress tests showed that financial institutions in Singapore are resilient to the global and domestic risks they are exposed to. In addition to the macroeconomic scenario, direct insurance companies were also stress tested on other insurance scenarios such as a flu pandemic.

As part of the exercise, MAS also shared findings and lessons from the stress tests with participating institutions. the issues discussed included key stress test results, good financial institution practices and emerging risks identified through MAS’ surveillance work and participation in international fora.

Industry-Wide Business Continuity Exercisethe Association of Banks in Singapore (ABS) and MAS jointly organised an industry-wide business continuity exercise on 21 november 2014. this is the fourth exercise in the last eight years. A total of 141 organisations participated. participants included commercial and investment banks, finance companies, insurance/reinsurance firms, asset management firms, securities and broking houses, Singapore exchange ltd (SGX), financial market infrastructure providers, ABS and MAS. the exercise provided a platform for financial institutions to test and verify their

crisis management plans for cyber-attacks that could compromise data, affect the availability of critical systems and services, and disrupt market infrastructure. Financial institutions also tested their communication and coordination with regulators, critical infrastructure providers and with one another. MAS and the industry will be working jointly to address the lessons learned, so as to enhance the financial industry’s overall preparedness and resilience to cyber-attacks.

Industry Penetration Testing Guidelines and ExerciseMAS and the ABS Standing Committee on Cyber Security jointly developed a set of industry guidelines on the planning and execution of penetration testing (PT) of IT systems by financial institutions. These were intended to help raise the quality of pts conducted by financial institutions, and to further improve the cyber resilience of the financial sector.

using these guidelines, 11 major financial institutions subsequently participated in a pt exercise. observations from the analysis of the results have been shared with the industry to raise awareness of the common and high-risk vulnerabilities.

BANKING

Strengthening resilienceMAS published in April 2015 a framework for identifying and supervising domestic systemically important banks (D-SIBs). D-SIBs are banks that are assessed to have a significant impact on the stability of the financial system and the proper functioning of the broader economy. Banks that are designated as D-SIBs will be required to comply with policy measures to address the risks that they may pose to the financial system. These include local incorporation of retail operations for foreign


bank branches with a significant retail presence, higher capital requirements, recovery and resolution planning, and lCR requirements.

Guidance on Private Banking ControlsMAS issued the Guidance on private Banking Controls in June 2014 and held industry briefings to help financial institutions strengthen controls and risk management practices in their private banking businesses. the guidance covered areas such as anti-money laundering and countering the financing of terrorism (AMl/CFt), fraud prevention and investment suitability. the report drew on the industry practices observed from MAS’ review of the private banking operations of Singapore-based banks and merchant banks and also set out MAS’ supervisory expectations. Many of the sound practices and areas for improvement shared in the report are equally relevant for other client-facing businesses of financial institutions.

SECurITIES, FuTurES AND OvEr-ThE-COuNTEr DErIvATIvES

review of Market Structure and Practices on 1 August 2014, MAS and SGX announced a suite of measures to strengthen the securities market structure and practices in Singapore. this followed a 12-week public consultation that commenced in February 2014, where responses received were generally positive. the measures include:

• Minimum trading price of S$0.20 for issuers listed on the SGX Mainboard;

• Collateral requirement for securities trading;

• Short position reporting requirements;

• enhanced transparency of trading restrictions imposed by securities intermediaries; and

• Reinforcing the SGX listings and enforcement framework.

MAS worked closely with SGX and the industry to ensure the smooth implementation of these measures. on 31 December 2014, the Securities Association of Singapore issued a set of industry guidelines on trading restrictions for its members. these guidelines ensure that the dissemination of

information on trading restrictions is consistent, fair, orderly and transparent. on 2 March 2015, SGX introduced a minimum trading price requirement of S$0.20 for Mainboard-listed companies. Issuers are given a one-year transition period, and will have to comply with this requirement by 1 March 2016. In addition, SGX will establish the independent listings Advisory Committee, listings Disciplinary Committee and listings Appeals Committee in the second half of 2015.

MAS and SGX will continue to engage the industry on the implementation of the short position reporting and collateral requirements, to be implemented in 2016.

Futures on the futures front, Singapore exchange Derivatives trading limited (SGX-Dt) obtained approval from the uS Commodity Futures trading Commission (CFtC) as a registered Foreign Board of trade (FBot) in January 2015. the FBot registration allows SGX-Dt to provide uS customers with direct access to its trading infrastructure.

Over-The-Counter Derivatives reforms MAS demonstrated its continued commitment to implement over-the-counter (otC) derivatives reforms. In February 2015, MAS issued a public consultation on further legislative amendments to complete the expansion of the Securities and Futures Act (SFA) to regulate otC derivatives. the consultation includes amendments relating to the regulation of otC derivatives markets and intermediaries, powers to implement mandatory trading of otC derivatives, as well as the transfer of the regulation of commodity derivatives from the Commodity trading Act.

Given the cross-border nature of otC derivatives transactions, supervisory cooperation with foreign counterparts is essential. Following the Australian Securities and Investments Commission’s (ASIC’s) authorisation of DtCC Data Repository Singapore (DDRS) as a trade repository for Australia’s reporting mandate, MAS signed a Data Access Memorandum of understanding (Mou) with ASIC on 16 September 2014 to facilitate the latter’s access to the derivatives trade data held in DDRS.

As an international financial centre, financial market infrastructures in Singapore have to be


able to offer their services to both domestic and overseas participants. In 2013, Singapore exchange Derivatives Clearing limited (SGX-DC) was registered as a Designated Clearing organisation with the uS CFtC. this allows SGX-DC to provide clearing services to uS persons. Further, Singapore’s central counterparty (CCp) regime was assessed to be equivalent by the european Commission in 2014, paving the way for local CCps to provide clearing services to european participants. Following the successful conclusion of a supervisory Mou between MAS and the european Securities and Markets Authority (eSMA) on 9 March 2015, SGX-DC and the Central Depository (pte) limited have been recognised by eSMA to offer services in the european union.

review of regulatory Safeguards for InvestorsIn July 2014, MAS consulted the public on a package of proposals to enhance regulatory safeguards for investors in the capital markets.

the three key proposals were to:

• extend capital market regulatory safeguards to investors in certain non-conventional investment products that are in substance capital raising products;

• Introduce a tool by which investment products can be rated for their relative complexity and risk of principal loss to empower investors to make more well-informed investment decisions; and

• Give investors who meet certain wealth thresholds the choice whether to be treated as an accredited investor (AI) with the consequent reduction of regulatory safeguards.

MAS will carefully consider all feedback received and further engage key stakeholders where necessary before implementing the proposals. Facilitating Bond Offerings to retail Investors In December 2014, MAS consulted on draft legislation to facilitate greater access by retail investors to corporate bonds through the following:

• A bond seasoning framework under which wholesale bonds issued by corporates that

satisfy specified eligibility criteria (such as size, listing track record and strong credit profile) may be re-denominated into smaller lot sizes after the bonds have been listed for six months. eligible corporates will also be exempted from providing a prospectus for additional offers to retail investors of new bonds with the same terms as the re-denominated bonds.

• An exempt bond issuers framework under which bonds issued by corporates that satisfy even stricter eligibility criteria can be offered directly to retail investors without a prospectus.

MAS is in the process of finalising the legislation. Electronic lodgement of Prospectuses and Offerson 29 July 2014, MAS enhanced offers and prospectuses electronic Repository and Access (opeRA) to enable electronic lodgements of applications for the authorisation or recognition of collective investment schemes (CIS) and their offer documents. In March 2015, a two-factor authentication system was also implemented to enhance security for access to opeRA.

Crowdfunding for Small and Medium Enterprises In February 2015, MAS published a consultation paper on securities-based crowdfunding (SCF). The paper set out proposals and clarifications to help start-ups, and small and medium enterprises access alternative sources of funding through SCF.

to strike a balance between developing SCF in Singapore and ensuring that there are sufficient safeguards for investors, MAS proposed to facilitate SCF to AIs and institutional investors by:

• Lowering the current financial requirements for intermediaries that deal in securities, so long as they do not handle or hold customer monies, assets or positions and do not act as principal in transactions with customers. this will allow potential SCF platform operators with lower financial resources to apply for a licence to offer SCF investments; and

• Clarifying the application of the advertising restriction for offers made to AIs without a

robust, trusteD, DynamiC anD PurPoseFul FinanCial Centre


prospectus. This clarification will provide certainty to potential SCF platform operators on the manner in which they can publicise their business.

MAS will carefully consider all feedback received and further engage key stakeholders where necessary before finalising the measures. INSurANCE

risk-Based Capital FrameworkMAS conducted the second consultation in March 2014 on its review of the insurance risk-based capital framework (RBC 2). Following the consultation, MAS has been actively engaging the insurers, industry associations, external auditors and consultants, as well as the actuarial profession to further exchange views on RBC 2. MAS also conducted a comprehensive quantitative impact study (QIS) alongside the second consultation. Results showed that most insurers remained adequately capitalised under the proposed framework. MAS is reviewing the consultation feedback and will be refining the proposed framework to consider the feedback received. Specifically, MAS is considering moderating the calibration of asset and operational risk charges, recognising more diversification benefits and widening the eligibility criteria of the matching adjustment proposal. MAS is also exploring the possibility of giving some credit to the illiquid nature of other liabilities that do not qualify for the matching adjustment.

MAS will embark on another stage of consultation and conduct an additional QIS in 2015. MAS will continue to work closely with the industry to ensure that RBC 2 will be fit-for-purpose and support well-managed insurance businesses.

review of regulatory Framework for health PlansFollowing prime Minister lee Hsien loong’s 2013 national Day Rally speech, the MediShield life Review Committee (MlRC) was formed to review the proposed parameters for MediShield life to provide universal health coverage. the MlRC made a list of recommendations on MediShield life and Integrated Shield plans (Ips), including

enhancing the regulatory and accountability framework for Ips so that policyholders can make informed decisions regarding their healthcare financing needs.

Following MlRC’s recommendations, MAS worked with the Ministry of Health and the life insurance industry on measures to enhance disclosure requirements, strengthen protection for policyholders and improve the quality of conduct of intermediaries for the Ips. Some of these proposed measures include:

• Requiring insurers to include standardised disclosure information pertaining to premium rates, benefit coverage and switching;

• Restricting the use of the word “Shield” in the naming of accident and health policies to those that are Medisave-approved to avoid confusion with the non Medisave-approved policies;

• enhancing the competency of insurance intermediaries selling Ips by imposing a minimum number of training hours pertaining to MediShield life and Ips; and

• Requiring insurance intermediaries to disclose the total distribution cost upfront and enquire about the policyholder’s preference for the type of ward during the fact-find and needs analysis process.

MAS has also reviewed the regulatory framework for accident and health insurance policies to ensure that the proposed measures similarly apply to the non Medisave-approved policies. MAS is currently reviewing the feedback received from its consultation on the proposed measures conducted in Q2 2015. INTErNATIONAl SuPErvISOry COOPErATION

Promoting Consolidated Supervision and Cooperation with Foreign regulators MAS continues to participate in supervisory college meetings of international and regional banks as host supervisor. this allows MAS to cooperate more closely with the home supervisors of foreign banks and strengthen its understanding of developments


in other parts of the foreign banks’ groups that may have an impact on their Singapore operations. MAS also hosts supervisory college meetings for the three Singapore banking groups, involving supervisors in the region where the banks have sizeable operations. these meetings provide a forum for MAS and the foreign host supervisors of the three Singapore banking groups to exchange views and assessments of the banks’ cross-border activities.

Crisis Management Group Meetings MAS is a member of the Crisis Management Group (CMG) of six of the Global Systemically Important Banks (G-SIBs) that have significant operations in Singapore and participates in their CMG meetings. the meetings facilitate information exchanges between home and host supervisors and the establishment of institution-specific cross-border cooperation agreements to support recovery and resolution planning. they enhance preparedness and cross-border coordination for crisis management, including recovery and resolution planning, for these institutions.

ENFOrCEMENT

MAS Enforcement Monograph MAS issued an enforcement Monograph to provide investors and market participants with information on the market enforcement regime in Singapore.

the enforcement Monograph sets out the aims of MAS’ enforcement function and the guiding principles behind MAS’ enforcement philosophy and sheds light on the processes and investigation powers involved in policing market misconduct. It also highlights MAS’ efforts to achieve credible deterrence and uphold an effective market enforcement regime.

In addition, the enforcement Monograph elaborates on MAS’ active participation and continuous efforts in the area of international cooperation. MAS recognises the importance of international cooperation and the need for the exchange of information in enabling the effective enforcement of laws and regulations for securities and derivatives. on a regular basis, MAS works closely with foreign securities regulators to provide assistance and exchange of information under the International


organization of Securities Commissions (IoSCo) Multilateral Mou, and has contributed to many successful outcomes in enforcement action by foreign securities regulators in their jurisdictions.

Finally, the Monograph provides insight into the entire enforcement process. this ranges from the surveillance tools and sources of market intelligence that MAS relies on to detect market misconduct, to the powers that MAS uses to conduct investigations. It concludes with the spectrum of enforcement actions that can be taken by MAS and other authorities depending on the severity and nature of the misconduct.

MAS-CAD Joint Investigations In March 2015, MAS and the Commercial Affairs Department (CAD) started a new arrangement to jointly investigate market misconduct offences such as insider trading and market manipulation under part XII of the SFA. With this, selected MAS officers are also gazetted as Commercial Affairs Officers, which allows them the use of criminal powers of investigation.

the new arrangement enables MAS and CAD to consolidate their investigative resources and expertise, and both agencies will now be able to pursue either prosecution or civil penalty action. this provides a calibrated approach in meting out more deterrent enforcement actions and further strengthens public trust and confidence in Singapore’s capital markets.

Enforcement Actions In 2014, MAS was awarded the largest default judgment for insider trading imposed against an individual in the past decade. the sum comprised a civil penalty amount of S$2,865,414.75 for insider trading and a further sum of S$100,000 for the employment of manipulative and deceptive devices in connection with the purchase and sale of securities. Separately, MAS imposed a civil penalty of S$50,000 on his accomplice for the employment of manipulative and deceptive devices in connection with the purchase and sale of securities.

In another case, MAS took civil penalty action against a former relationship manager for insider


trading. He paid a penalty of S$50,000 and was prohibited from engaging in financial advisory services for a period of three years.

In the first quarter of 2015, MAS took two civil penalty actions. The first was against a former Chief Executive Officer of a listed company for making misleading disclosures to the market and for material omissions regarding the company. He paid a civil penalty of S$2.5 million and undertook to voluntarily surrender a portion of his shareholding in the company, as well as undertaking not to assume the role of director or be involved in management of any listed entity on SGX for a period of three years. This was the first civil penalty settlement that directly benefitted existing shareholders of the company through the increase in the net asset value per share.

the second civil penalty action was against a former remisier for false trading. MAS issued him a penalty of S$157,000 and prohibited him from engaging in regulated activities for a period of two years.

Between April 2014 and March 2015, MAS also published a total of 23 formal regulatory and enforcement actions against companies and individuals for market conduct breaches. these actions include reprimands, composition fines, civil penalties and prohibition orders. over this period, MAS took other regulatory and administrative actions in another 365 cases.

A TruSTED FINANCIAl CENTrE

FINANCIAl BENChMArKS

In July 2014, MAS issued a consultation paper on legislation to introduce a regulatory framework for financial benchmarks. MAS will carefully consider all feedback received prior to tabling the necessary legislative amendments in parliament.

When effected, the framework will introduce criminal sanctions for the manipulation of financial benchmarks under the SFA and regulate the setting of key financial benchmarks.

PrEvENTING MONEy lAuNDErING AND TErrOrISM FINANCING

Singapore is committed to the global effort to combat transnational crime. Singapore is a member of the Financial Action task Force (FAtF) and a founding member of the Asia/Pacific Group on Money laundering.

Singapore adopts a Whole-of-Government approach to combating money laundering (Ml) and terrorism financing (TF). This is led by the AMl/CFt Steering Committee, comprising the permanent Secretary of the Ministry of Home Affairs, permanent Secretary of the Ministry of Finance and Managing Director of MAS. Singapore’s AMl/CFt policy objectives are to: i) detect, deter and prevent Ml, associated predicate offences and tF; and ii) protect the integrity of its financial system from illegal activities and illicit fund flows.

In line with our AMl/CFt policy objectives, MAS issued revised Notices to financial institutions on the prevention of money laundering and terrorism financing (AML/CFT Notices) on 24 April 2015. the revisions are benchmarked against international best practices and the latest international standards set by the FAtF. Many of the proposed changes formalise existing supervisory expectations and practices of financial institutions. Key changes to the AML/CFt notices include:

• new enterprise-wide Ml/tF risk assessment requirements;

• enhanced requirements to identify and verify beneficial ownership of customers;

• new category of politically exposed persons relating to international organisations; and

• Additional requirements for cross-border wire transfers exceeding S$1,500.

Industry feedback was sought and incorporated into the revised AMl/CFt notices. MAS also updated the Guidelines to the AMl/CFt notices to elaborate on our supervisory expectations.



MAS requires financial institutions to implement rigorous AMl/CFt controls and measures to detect and deter illegal activities and illicit fund flows. the latest revisions to the AMl/CFt notices underlines MAS’ continued vigilance to stem such risks.

MAS has been dedicating significant resources towards AMl/CFt supervision and enforcement. In the last year, MAS conducted 74 AMl/CFt inspections covering banks, insurance companies, money-changers, remittance agents, capital markets intermediaries and licensed trust companies. MAS also engaged external auditors to inspect 297 capital markets intermediaries and plans to do likewise for money-changers and remittance agents, which were identified as higher risk sectors in the national Risk Assessment published in January 2014.

While AMl/CFt controls were generally in place in financial institutions, MAS identified several areas where there was room for improvement. MAS noted instances where financial institutions had updated their internal policies to address changes in regulation or risk environment, but these were not implemented in an adequate or timely manner by business units, particularly with regard to applying enhanced measures to identify customers presenting higher Ml/tF risk. Certain financial institutions did not periodically review the parameters and thresholds used to detect suspicious transactions. others needed to strengthen their internal controls to ensure that alerts raised by their screening and transaction monitoring systems were assessed in a rigorous manner, and closed with supporting documentation. MAS had required the financial institutions to promptly address all deficiencies and take steps to strengthen their controls and risk management framework.

MAS conducted industry briefings and published two guidance papers, “Guidance on private Banking Controls” and the “Direct life Insurers: Guidance on AML/CFT Controls”, to help financial institutions better identify gaps and further strengthen their controls and risk management.

MAS takes a serious view of non-compliance with its AML/CFT requirements and failure by financial institutions to institute a robust AMl/CFt controls

and risk management framework. Sanctions are imposed on institutions for regulatory contraventions and deficiencies in their AML/CFt measures. these include formal warnings, reprimands, restrictions on operations, financial penalties and revocation of licences. In 2014, MAS issued nine warnings and reprimands to financial institutions. MAS also imposed financial penalties on six financial institutions ranging from S$1,000 to S$700,000. ENhANCING EXChANGE OF INFOrMATION ON TAX

Singapore continued to strengthen its exchange of Information (eoI) framework by lifting the dual criminality requirement such that Singapore can render mutual legal assistance for foreign requests involving serious tax evasion offences, regardless of the type of tax evaded. this helps strengthen Singapore’s ability to assist in bona fide cases of wilful or fraudulent tax evasion.

on Automatic eoI (AeoI), Singapore and the uS signed a Foreign Account tax Compliance Act (FAtCA) Model 1 Intergovernmental Agreement (IGA) in December 2014. FATCA is Singapore’s first AEOI agreement and the IGA facilitates Singapore-based financial institutions’ compliance with FATCA. Without the IGA, financial institutions would have had to enter into individual agreements with the uS to avoid FAtCA-related withholding tax.

With the Model 1 IGA, financial institutions will transmit information pertaining to financial accounts held by uS persons to the Inland Revenue Authority of Singapore (IRAS), which will in turn transmit the information to the uS Internal Revenue Service. the FAtCA reporting obligations of financial institutions would be deemed met once they have transmitted the information to IRAS.

In line with the global move towards AeoI, Singapore has also committed to the Global Forum on transparency and exchange of Information for tax purposes that it will implement AeoI according to the internationally-agreed standard by 2018. over 90 other jurisdictions, including major financial centres such as Hong Kong, Switzerland and the united Arab emirates, which includes Dubai, have made similar commitments.


A DyNAMIC AND PurPOSEFul FINANCIAl CENTrE

ATTrACTING INSTITuTIONAl INvESTOrS

the asset management industry in Singapore continued to grow in size and diversity. Assets under management (AuM) rose by 30% from S$1.82 trillion in 2013 to S$2.36 trillion in 2014. Allocation to Asia-Pacific investments accounted for two-thirds of total AUM, reflecting continued global investor interest in the region.

Given Asia’s sound economic prospects, sovereign wealth and pension funds have continued to set up in Singapore to access the investment

opportunities in the region. In late 2014, la Caisse de depot et placement du Québec set up an office in Singapore, joining the Investment Company of people’s Republic of China, norges Bank Investment Management and the Swiss national Bank. the Korean national pension Service has also decided to set up an office in Singapore in 2015.

ENhANCING rISK MANAGEMENT ECOSySTEM

offshore non-life insurance grew 8.8% y-o-y in gross written premiums, supported by expansion in both the direct and reinsurance segments. the proportion of offshore non-life insurance to total non-life insurance has increased steadily, rising

to develop Singapore as a global insurance marketplace, MAS is making a concerted push towards data analytics and innovation-led growth through three new projects:

Cyber risk Test-Bed MAS has launched a cyber risk test-bed project to help the industry better understand new and emerging risks and exposures associated with cyber risks, support the development of more robust pricing policies and promote greater protection against these risks. the test-bed brings together a core group of corporates and insurers to simulate cyber loss events to create synthetic data. together with historical claims data, MAS seeks to generate, aggregate and analyse data, as well as develop cyber loss models to accelerate the development of the cyber insurance market.

Natural Catastrophe Data Analytics Exchange to address existing data and modelling gaps, Singapore will establish a natural

catastrophe data and analytics platform to increase the availability of quality data, enhance the underwriting process and spur collective market analytics and innovation. Combining the features of a data bureau, research institute and modelling platform, the natural Catastrophe Data Analytics exchange is expected to build industry exposure and loss databases, develop industry loss index benchmarks and catalyse the development of innovative risk transfer products, such as insurance-linked securities and government pools.

Electronic Insurance Trading PlatformMAS will support the establishment of an electronic insurance/reinsurance platform to enhance the efficiency of trading insurance/reinsurance risks. the platform will support insurers/reinsurers and brokers through an end-to-end reinsurance placement process covering negotiation, quotation, binding and endorsements for commercial insurance and reinsurance business.

Insurance vision 2020boX 1



Ongoing Efforts to Develop a robust rMB Ecosystem boX 2

Oct 2014Direct trading for RMB and SGD commenced on the China Foreign exchange trade System. SGX also launched RMB futures contracts, adding to its suite of pan-Asian exchange-traded products.

Singapore and China agreed on further collaborations at the 11th Joint Council for Bilateral Co-operation:

• China to study Singapore’s proposal for China-incorporated financial institutions to issue RMB bonds directly in Singapore.

• • MAS and the China Securities Regulatory Commission to enhance

collaboration in derivatives markets. • • MAS and the China Insurance Regulatory Commission to collaborate

in catastrophe risk insurance.

Jan 2015Singapore hosted the first Singapore-United Kingdom RMB Forum. the forum discussed the need to:

• Increase awareness of offshore RMB market developments;

• • Build up liquidity in offshore markets; and

• Structure a wider range of RMB-denominated products and promote offshore RMB investments to meet market needs.

Jul 2014MAS launched the overnight RMB liquidity Facility to cater to the short-term RMB funding needs of financial institutions.

Cross-border RMB arrangements between Singapore and Suzhou Industrial park (SIp) as well as tianjin eco-City (teC) were launched to allow eligible companies in SIp and teC to borrow in RMB from Singapore’s market.


from 58% in 2009 to 66% in 2014, reflecting Singapore’s strong position as a regional specialist reinsurance hub. looking ahead, the non-life insurance market in Asia is expected to continue its growth momentum, with Southeast Asia and emerging countries like China and India leading premium growth in 2015.

ENhANCING ThE rMB ECOSySTEM

Banking Bank lending has remained strong, with total assets in the banking sector increasing by 9% to S$1.06 trillion. However, a slowdown in regional economic growth and fall in commodity prices have led to a slowdown in overall trade and total outstanding trade finance intermediated in Singapore fell by 16% over the past year to S$194 billion. notwithstanding, Singapore remained Asia’s largest commodity trading hub, and continues to serve as the centre for regional trade and credit activities. More financial institutions have set up new trade finance functions or enhanced their current setups in Singapore. the International Chamber of Commerce also launched its academy in Singapore to serve as a training hub for global trade professionals. Collaborative efforts between the Chinese government and MAS to liberalise the RMB have continued to yield positive results. Singapore’s RMB market registered strong growth in 2014, and was the largest offshore RMB centre outside China and Hong Kong by RMB payments value, according to the Society for Worldwide Interbank Financial telecommunication (SWIFt). From March 2014 to March 2015, RMB deposits grew by almost 20% to reach RMB 257 billion. As at March 2015, outstanding RMB loans and trade financing exceeded RMB 300 billion and the average daily turnover for RMB foreign exchange (FX) amounted to about uSD 60 billion. STrENGThENING CAPITAl MArKET lINKAGES AND INCrEASING PrODuCT DIvErSITy

Corporate Debt MarketSingapore’s corporate debt market registered 13% growth in 2014. the market attracted a diverse range of issuers across a broad range of bond issuance, including lion City bonds, BASel III-compliant tier 1 securities and Islamic sukuks. In

2014, the total issuance of RMB bonds in Singapore exceeded RMB 35 billion, more than double from the year before.

Foreign Exchange and listed Derivatives MarketsSingapore continued to grow strongly as a trading hub for FX, and financial and commodity derivatives. Average daily FX turnover volume in Singapore grew by 40% to uS$478 billion in october 2014 according to the Singapore Foreign exchange Market Committee survey, compared to uS$344 billion in october 2013. total futures and options volume on SGX in 2014 also increased 7.4% to hit a new high of 120 million contracts over the same period. notably, SGX AsiaClear iron ore futures volume was 2 million contracts, more than 30 times the number of contracts a year earlier. FtSe China A50 futures volume almost doubled to 41 million contracts from 22 million contracts in 2013 and InR/uSD FX futures trading totalled almost 600,000 contracts in 2014, following its launch in november 2013.

to serve investment and risk management needs in the Asian time zone, SGX launched a suite of Asian FX futures (uSD/CnH, CnY/uSD, tHB/uSD, uSD/JpY) and a series of new commodity derivatives (electricity and gold futures). SGX’s equity index futures also did well, with turnover in the China A-50 futures hitting new highs. the MSCI Malaysia Index futures was also launched in Q1 2015, adding to a suite of 14 regional equity derivatives indexes available for trading on SGX.

ExchangesIn 2014, MAS, in conjunction with ASeAn securities regulators, central banks and exchanges, developed a blueprint for the establishment of post-trade (i.e. clearing, depository and settlement) linkages. the vision is to build linkages between ASeAn exchanges that will reduce post-trade costs and counterparty risks arising from the current practice of using multiple brokers for cross-border ASeAn trades. With these linkages, an investor can use a single domestic account to invest in stocks listed on other ASeAn exchanges. the blueprint was welcomed by the ASeAn Finance Ministers at the 18th ASeAn Finance Ministers’ Meeting in April 2014. the ASeAn Capital Markets Infrastructure (ACMI) taskforce was also formally set up at the ASeAn Capital Market Forum (comprising the various ASeAn



Growth of Singapore’s International Financial CentreboX 3

INSurANCEProportion of Offshore Non-life Insuranceto Total Non-life Insurance

58% to 66%in 2009 in 2014

BANKING Total Assets in the Banking SectorIncreasing by

9% to S$1.06 trillion

ASSET AND WEAlTh MANAGEMENTAssets under Management (AuM) rose by

30% to S$2.36 trillion

FOrEIGN EXChANGE AND lISTED DErIvATIvES MArKETAverage Daily FX Turnover volume in SingaporeGrew by

40% to uS$478 billionin 2014

COrPOrATE DEBT MArKETregistered Growth of

13% in 2014


securities commission heads) in September 2014 to implement the post-trade linkages.

Strengthening the real Estate Investment Trust MarketIn october 2014, MAS published a consultation paper on proposals to strengthen the transparency and corporate governance of Singapore’s real estate investment trust (ReIt) market and instil greater investor confidence in the REIT market. The final proposals took into account views and suggestions from industry stakeholders.

DEvElOPING GlOBAlly COMPETITIvE TAlENT FOr ThE FuTurE

MAS continued to work with the Institute of Banking and Finance (IBF) to put in place programmes to promote competency development and leadership capabilities of professionals in the financial sector. Given heightened demand for competent It professionals in the financial sector, the Financial It Academy @SMu (FItA) was set up to support the training needs of the industry in the technology and operations space. In partnership with MAS and the Infocomm Development Authority of Singapore, FItA develops and delivers courses that equip professionals with integrated banking and technology skills. this is a multi-disciplinary approach that will enable professionals to drive process re-engineering and business growth. to help finance professionals identify career progression and upskilling opportunities, IBF further rolled out practice-development roadmaps in 2014 through revised competency standards for risk management, and technology and operations. By 2016, IBF would have completed the revised standards across 13 major job segments in the financial sector, ranging from compliance and corporate banking, to financial markets and financial planning.

MAS also worked with financial institutions to develop programmes that will provide Singaporean professionals with more cross-functional and overseas exposure within their financial institutions. To enhance the leadership capabilities of Singaporean finance professionals at senior management levels, a new Asian Financial leaders programme will be launched in 2015.

the programme will provide participants with opportunities to engage regional policymakers and corporate leaders, and develop keener insights into key markets in Asia.

looking ahead, MAS will engage the industry to anticipate how job roles in the financial sector will evolve as technological developments impact the financial landscape. The objective is to put in place programmes to ensure that finance professionals will continue to be equipped with the necessary skills and capabilities for the future. MAS will also work closely with tertiary institutions to shape their curricula to provide graduates with job-ready skills, enhance financial sector internship and apprenticeship opportunities for university and polytechnic students, as well as create a greater range of training opportunities for Singaporean finance professionals at all levels.

hArNESSING TEChNOlOGy AND INNOvATION FOr FuTurE GrOWTh

technology and innovation will be a critical driver of financial services growth in the future. Digital and mobile technologies will transform payments channels and enhance customer access to banking and financial services. At the same time, financial institutions will use data analytics and cognitive computing more extensively to better anticipate and meet customer needs, as well as strengthen risk management in an increasingly complex environment.

To promote technology and innovation in financial services, MAS will work with the industry to identify innovative uses of technology to:

• promote e-trading platforms;

• Enhance payments efficiency; and

• Develop industry platforms or shared service utilities to facilitate information aggregation for data analytics and risk management purposes.

MAS will also engage financial institutions to carry out new product and business development work in Singapore, and test-bed innovative ideas for the Singapore market and beyond.


Anchor oFEconoMic


SErving thE public,EngAging

StAKEholDErS


servinG the PubliC,enGAGInG StAKeHolDeRS

SErvING ThE PuBlIC

MANAGING DOllArS AND CENTS

As at 31 March 2015, the gross currency in circulation was S$37.0 billion (Chart 5). this was an increase of 9.2% from a year ago, as S$53.6 billion worth of notes and coins were issued to banks while S$50.3 billion were returned.

there was an increase in demand for “good-as-new” S$2 notes for the 2015 lunar new Year. the total quantity of S$2 notes issued increased by 3.5% compared with 2014, but the number of brand new S$2 notes issued was slightly lower. the increase in demand for S$2 notes was met entirely by “good-as-new” notes.

to commemorate Singapore’s 50th year of independence, MAS issued a series of three commemorative coins on 28 May 2015, comprising a S$2 cupro-nickel proof-like coin, a S$5 silver proof coin and a S$50 gold proof coin. the coins are themed “education, Building Our Nation Together”, reflecting the fundamental role that education has played in the transformation of a young nation. the cupro-nickel coin features basic education at the primary and secondary levels, which equips children with the foundational skills, character and values that prepare them for the future. the silver coin showcases higher education that provides students with multiple pathways to achieve their aspirations. the gold coin features Singapore’s educators, who seek to bring out

Gross Currency in Circulation (s$billion) 2011 2012 2013 2014 2015

notes 24.74 27.58 30.27 32.52 35.59

Coins 1.20 1.25 1.29 1.34 1.39

total 25.94 28.83 31.56 33.86 36.98

Chart 5. Gross Currency in Circulation

2011 2012 2013 2014 2015

S$25.94 Billion

S$28.83 Billion

S$31.56 BillionS$33.86 Billion

S$36.98 Billion


SG50 Deluxe 3-in-1 Coin Set

the best in every child. Singapore’s multiracial diversity is also depicted in all three designs.

MAS will also issue a series of commemorative notes, comprising a S$50 note and five S$10 notes, all in polymer. the design of the commemorative notes draws inspiration from significant milestones and achievements in Singapore’s history, and highlights values and aspirations that underpin Singapore’s progress.

SINGAPOrE SAvINGS BONDS

MAS and the Government will introduce Singapore Savings Bonds in the second half of 2015 to give individual investors more options to save for the long term. Savings Bonds are a new type of Singapore Government Securities (SGS), with features that make them accessible and suitable for individuals.

• Savings Bonds are principal guaranteed. Investors can always get their full investment amount back and will not suffer capital losses. Compared to conventional SGS and corporate bonds whose prices are affected by factors such as interest rate changes, Savings Bonds are easier to understand, especially for those who are new to investing.

• Savings Bonds have a term of 10 years and pay interest that is linked to SGS market rates.

Bondholders earn a higher return the longer they hold their bonds. this allows individuals to save for the long term and receive a term premium.

• Investors can redeem their Savings Bonds monthly, so there is no need to decide upfront how long they wish to hold the bonds. Savings Bonds will also be issued every month and in denominations of S$500. this makes them accessible on a regular basis to individuals with smaller investment amounts.

Savings Bonds can be a useful instrument to meet different financial needs. Retirees and those nearing retirement will find this a safe and flexible option to maintain their savings; other investors can set aside money in Savings Bonds for “rainy days” and earn a regular income while doing so, or use Savings Bonds to manage risks as part of a balanced investment portfolio. MAS hopes that the Savings Bonds programme will benefit many individuals. MONEySENSE

MoneySenSe continues to provide financial education to Singaporeans, equipping them with financial knowledge and capabilities to make informed financial decisions in their daily lives. through the use of multiple channels and strategies, MoneySENSE strives to deliver financial education effectively to different segments of the population.


servinG the PubliC, enGaGinG staKeholDers

Since its inception in 2012, the MoneySenSe–Singapore polytechnic Institute for Financial literacy has been working with employers to create access to financial education for working adults through lunchtime talks at their workplaces. the Institute has developed an extensive catalogue of modules in financial education, covering 14 topics from basic money management, managing credit facilities to planning for retirement. More than 1,500 talks and workshops have been delivered over the past three years, with nearly 45,000 working adults benefitting from the Institute’s efforts. the Institute also works closely with government agencies such as the Central provident Fund Board and Ministry of Health to ensure timely updates to relevant content in the Institute’s curriculum.

Beyond working adults, the Institute has also reached out to low-income families through Family Service Centres to help these families better manage their finances. The Institute also held Basic Money Management workshops for pre-release inmates to facilitate their reintegration in society. In addition, the Institute continued to conduct train-the-trainer programmes, including training for social workers and counsellors at the Social Service Institute, so that they are better equipped to support those who seek help from them.

Besides organising roadshows to create awareness of the Institute and its programmes, the Institute also organised a networking event in october 2014 at the national Community leadership Institute to establish networks with grassroots leaders. the Institute took the opportunity to equip the grassroots leaders with financial knowledge and tools so that they can then help their constituents who may need assistance on financial matters.

to improve the accessibility of the Institute’s resources, an online learning platform with 19 online modules has been developed to allow the general public to learn more about money management and financial planning. the Institute also launched an e-newsletter to provide financial tips and information on upcoming events.

the Institute will continue to expand its current library of learning modules and training materials. It will also work more closely with Voluntary Welfare organisations and self-help groups to reach out to the respective communities that they serve.

For more information on the Institute, please visit www.finlit.sg

Delivering Financial Education through the Institute for Financial literacyboX 4

The Institute for Financial Literacy distributing brochures to seniors at a roadshow

The Institute for Financial Literacy conducting workshops and talks at the National Community Leadership Institute networking event


Equipping the young with Financial CapabilitiesIt is important to inculcate good financial habits among the young. In 2014, MoneySenSe participated in student-centric events – YoutHphoria 2014 at Singapore Discovery Centre and the SGX-uniSIM Investor education Day – to promote financial literacy. Information panels carrying simple financial messages displayed at these events reached out to over 3,000 students.

As a co-sponsor of the Singapore Games Creation Competition (SGCC) 2015, MoneySenSe is working closely with the national Council on problem Gambling and nanyang polytechnic to organise a competition for secondary school students to create web-based games. one of the themes, “Don’t leave It up to Chance!”, encourages participants to incorporate financial concepts, such as saving money and budgeting, into their games. With last year’s SGCC attracting entries from 43 schools, the competition is an effective way of using games to deliver financial literacy messages to students.

MoneySenSe will also be supporting the national primary Games Creation Competition 2015 for primary school students. In preparation for the competition, students will learn about basic money management through workshops and talks. Such competitions allow MoneySenSe to reach the young in ways that are more appealing to them.

Bringing Financial Education to the CommunityTo bring financial education to the community, MoneySenSe held roving exhibitions featuring games and information panels at community clubs and grassroots events. It also participated in the HDB Financial Awareness exhibitions, held at various locations throughout Singapore.

In october 2014, MoneySenSe reached out to retirees and seniors in the “time of Your life – learning Journeys for the 50plus” event jointly organised by the Council for third Age and the national library Board. the MoneySenSe-Singapore polytechnic Institute for Financial literacy provided talks to the seniors at this event. MoneySenSe has distributed over 52,000 copies

Debt management tips from MoneySENSE’s “My Money Book”



of the “My Money Book”, which provides practical tips on how to better manage personal finances. the booklet is available in all four languages. Such outreach efforts have enabled MoneySenSe to disseminate simple but important financial messages to Singaporeans from all walks of life.

leveraging the Mass MediaMoneySenSe will be stepping up its mass media outreach efforts to create greater impact and bring financial education to more Singaporeans. We are embarking on a series of integrated advertising campaigns in 2015 to:

• Raise awareness of how two key initiatives under the Financial Advisory Industry Review (FAIR), compareFIRSt and Direct purchase Insurance (DpI), will empower consumers to buy life insurance with greater confidence;

• encourage consumers to save and invest regularly with simple low cost investments; and

• Highlight the importance of borrowing responsibly.

A multitude of channels ranging from print media, out-of-home media to digital platforms will be used to reach all segments of the population.

these initiatives complement existing efforts to engage consumers through the MoneySenSe website, MoneySenSe Facebook page, info-advertorials, talks, workshops and seminars.

ENhANCING STAKEhOlDEr ENGAGEMENT

MAS believes firmly in the merits of consultation with the public and stakeholders in the formulation of policies. In addition, MAS endeavours to communicate its policies to the public and the financial industry clearly. As part of the public-sector wide commitment to be a trusted public service, MAS embarked on an internal review in 2014 to improve the way it consults and engages with the public and its stakeholders.

As a result of the review, MAS will be implementing the following key initiatives in 2015:

• Include a policy highlights sheet for consultations on policies that substantially impact consumers. By tailoring the content to suit consumers, it will help the public to better understand MAS’ proposals and allow them to provide valuable feedback.

• utilise a broader range of communication channels and tools to better reach and connect with different stakeholders, especially consumers. this includes greater usage of online channels, such as microsites, and conveying information in a more interactive and engaging manner.

• Aim to provide clear and timely responses to queries from the public, financial institutions and other stakeholders. this will be effected through enhancements to internal practices.

PrOTECTING CONSuMErS

FINANCIAl ADvISOry INDuSTry rEvIEW

In September 2013, MAS accepted most of the recommendations of the FAIR panel to raise the professionalism of the financial advisory industry and improve efficiency in the distribution of life insurance and investment products. three key FAIR initiatives were implemented in the first half of 2015. these are the balanced scorecard (BSC) framework, DpI products and web aggregator for life insurance products.

Balanced Scorecard FrameworkIn January 2015, MAS introduced a BSC remuneration framework to promote a culture of fair dealing. under the BSC framework, a significant proportion of a representative’s remuneration will be dependent on whether the representative has taken steps to understand the customer’s needs, recommend suitable products, make adequate disclosures and conduct himself professionally. Financial advisers have a one-year transition period to familiarise themselves with the framework before the requirements are legislated in January 2016.

Direct Purchase Insurancelaunched in April 2015, DpI is a class of simple term and whole life insurance products


with total and permanent disability cover and optional critical illness rider that is sold without commissions and financial advice. Consumers who know what life insurance products they want can purchase DpI directly from the customer service counters or websites (if available) of life insurance companies. As DpI is sold without financial advice, the products have broadly standardised features which makes it easier to

compare between them when deciding which products to purchase. their premiums are lower than comparable life insurance products because no commissions are charged.

Web Aggregator for life Insurance Productslaunched in April 2015, compareFIRSt (www.comparefirst.sg) is an interactive web portal that allows consumers to easily compare the

premiums and features of similar life insurance products offered by different insurance companies in Singapore. It allows consumers to make more informed decisions when buying life insurance policies.

Consumers can compare DpI, term life insurance, whole life insurance and endowment policies on compareFIRSt. General product information on investment-linked insurance policies is also available on the portal. Consumers who are interested to purchase life insurance policies after using compareFIRSt may approach the life insurance companies or their financial advisory representatives.

www.comparefirst.sg

Infographic for Direct Purchase Insurance published in mass media


compareFIRSt is a collaborative effort by the Consumers Association of Singapore, MAS, the life Insurance Association, Singapore and MoneySenSe.

With the introduction of DpI and compareFIRSt, consumers will benefit from greater price transparency and enhanced market efficiency in the life insurance market.

ENhANCING PrOSPECTuS DISClOSurE rulES FOr SECurITIES OFFErS

Improving the readability of ProspectusesIn February 2015, MAS issued a consultation paper proposing guidelines on good drafting practices for prospectuses. the guidelines encourage the use of plain english and presentation of information in prospectuses in a clear, concise and logical manner. Further, MAS published the guidelines to implement proposals on the product highlight sheets (the extended pHS guidelines) for offers of plain vanilla debt securities, equity securities and preference shares, perpetual securities and convertible bonds (hybrid instruments). the extended pHS guidelines apply to prospectuses and offer information statements lodged with MAS on or after 1 June 2015. these guidelines will improve the readability of prospectuses and help retail investors better understand the key information in prospectuses. this will empower investors to make informed investment decisions.

ENCOurAGING PruDENT BOrrOWING AND lENDING BEhAvIOur

Implementation of unsecured Credit rules to ensure sound underwriting based on a realistic assessment of an individual’s repayment capacity, financial institutions are required to review a borrower’s credit record before they can issue new credit cards or unsecured credit facilities, or increase credit limits on existing facilities. the review covers the borrower’s total outstanding balances and credit limits of loans across all financial institutions.

In addition, financial institutions will need to ask borrowers for their preferred credit limits when borrowers apply for new facilities. they are also required to obtain a borrower’s consent in writing before granting any credit limit increase. these measures help to empower borrowers with greater control over the use of their unsecured credit facilities and credit limits.

Enhanced Credit Information in the Credit Bureausto facilitate implementation of the new unsecured credit rules, MAS worked closely with the consumer credit bureaus to enhance the credit information they collect. Since June 2014, members of the credit bureaus have been contributing information on their customers’ outstanding debt balances and credit limits to the credit bureaus. Financial institutions can access the information when they conduct credit bureau checks on a borrower. Consumers can purchase their personal credit report from the bureaus to check on their overall level of indebtedness. the enhanced information empowers both borrowers and financial institutions to make better borrowing and lending decisions.

PArTNErING ACADEMIA

Since 2009, MAS has sponsored a term professorship in economics and Finance at the national university of Singapore (nuS). In 2014, professors John taylor (Stanford university) and Ronald Masulis (university of new South Wales) were appointed term professors. Aside from interacting with faculty and students at the nuS, they also shared their insights on monetary policy, the uS economy and corporate governance with MAS.

MAS also hosted other academics and former senior policymakers under its eminent Visitor programme. In addition to meeting with MAS’ senior management, eminent Visitors usually conduct in-house seminars, lectures and



on 24 May 2014, MAS co-organised the inaugural Asian Monetary policy Forum (AMpF), with the university of Chicago Booth School of Business and the national university of Singapore (nuS) Business School. Held under the auspices of the Asian Bureau of Finance and economic Research (ABFeR) and modelled after the highly successful uS Monetary policy Forum in new York, the aim of the AMpF is to raise the level of intellectual discourse on economic and monetary challenges confronting Asian policymakers. the event successfully brought together an exclusive group of senior central bankers, distinguished academics and private sector analysts to share their perspectives.

Mr Ravi Menon, Managing Director of MAS, set the tone for the forum in his keynote address on the role that monetary and macroprudential policies should play to help secure financial stability in the post-global financial crisis era. This was followed by the programme’s highlight—the presentation of a commissioned paper by prominent macroeconomist professor Maurice obstfeld (university of California, Berkeley) on “trilemmas and tradeoffs” in the international monetary system, which generated a lively discussion among participants. During

lunch, a panel discussion was convened, comprising former central bank Governors Dr Alan Bollard from the Reserve Bank of new Zealand, Mr Masaaki Shirakawa from the Bank of Japan and Dr Duvvuri Subbarao from the Reserve Bank of India. the afternoon saw private sector analysts and participants engaged in closed-door discussions on key economic and financial developments in the Asian region. the AMpF was brought to a close with a formal dinner featuring a keynote speech by professor John taylor of Stanford university on the topic “International Monetary Coordination: lessons for the Future from the past and present”.

Inaugural Asian Monetary Policy Forum boX 5

Prof Tan Chorh Chuan, President of NUS and Board Member of MAS, presents Professor Obstfeld with a token of appreciation


discussion sessions with MAS staff. In 2014/15, MAS welcomed a number of eminent former central bankers: Mr Masaaki Shirakawa (30th Governor of the Bank of Japan), Dr Duvuuri Subbarao (22nd Governor of the Reserve Bank of India), and Dr Donald Kohn (former Vice-Chair of the Board of Governors of the uS Federal Reserve System). they shared their insights and experiences on various aspects of central banking, including monetary and macroprudential policies. MAS also hosted professors Charles engel (university of Wisconsin-Madison) and Michael Spence (nobel laureate, new York university) in May 2014. Their lectures were beneficial in updating economists from MAS and the rest of the public sector on the latest research on the global economy and exchange rates.

MAS also invited some of the term professors and eminent Visitors to contribute articles to MAS’ Macroeconomic Review. In 2014,

professor philip lane (trinity College Dublin) wrote about international capital flows while professor John taylor gave his views on how the uS should re-normalise its monetary policy settings. local academics were also invited to contribute articles to the Review. Associate professor Davin Chor (nuS) and professor Hoon Hian teck (Singapore Management university) contributed articles, respectively, on Singapore’s position in global supply chains and the Government’s use of wage subsidies to facilitate macroeconomic adjustments.

In 2014, MAS expanded its collaboration with academics from the local universities through the MAS Macroeconomic Modelling Workshop. this workshop allowed the economic policy Group at MAS to share its suite of macroeconomic models for the first time with researchers in academia and industry, and provided an important platform for further meaningful collaboration. Documentation on the models themselves was also released on the MAS website.



vAluED pArtnEron thE

intErnAtionAlFront


valueD Partner on tHe InteRnAtIonAl FRont

INTErNATIONAl FINANCE

PrOMOTING GlOBAl GrOWTh AND STABIlITy

Deputy prime Minister (DpM) tharman Shanmugaratnam completed his term as Chairman of the IMF’s International Monetary and Financial Committee (IMFC) in March 2015. the IMFC provides broad policy guidance to the IMF executive Board. DpM tharman had been appointed to the position by his peers in 2011 for an initial three-year term, and was asked in 2014 to stay on for another year. Members expressed their appreciation to DpM tharman for his leadership during a challenging period for the global economy and for his strong advocacy of IMF reform.

During DpM tharman’s term as Chairman, he presided over policy discussions on the euro area sovereign debt crisis. He also fostered close partnership between the IMFC and the G20 to advance IMF quota and governance reform.

DpM tharman continued to participate in the discussions of the IMFC after the end of his term, representing the Southeast Asia Voting Group. these discussions centred on forestalling a prolonged period of mediocre global growth, and the need for comprehensive and well-integrated policies.

INTErNATIONAl FINANCIAl rEGulATOry rEFOrMS

MAS continues to contribute to the shaping of the international regulatory landscape and the enhancement of global financial stability as an active member of the Financial Stability Board (FSB), Basel Committee on Banking Supervision (BCBS), International Association of Insurance Supervisors (IAIS), IoSCo, and the Committee on payments and Market Infrastructures (CpMI).

MAS participates in the FSB plenary, Steering Committee and main Standing Committees, as well as various FSB workstreams. Mr Ravi Menon, Managing Director of MAS, was re-appointed to chair the FSB’s Standing Committee on Standards Implementation (SCSI) in March 2015 for a second two-year term. the SCSI is responsible for promoting consistent and effective implementation of G20/FSB reforms through rigorous implementation monitoring. In 2014, the SCSI analysed progress and challenges across FSB members in reducing mechanistic reliance on credit rating agency ratings, and piloted an implementation monitoring “dashboard” for the G20 leaders’ Summit in Brisbane in november 2014. In 2015, the SCSI will review members’ progress across a range of reform areas, including their supervisory frameworks and approaches for systemically important banks, otC derivatives trade reporting regimes, and resolution regimes.

MAS is also a member of the FSB Steering Group that oversees the impact assessment studies for the total loss Absorbing Capacity (tlAC) requirement for G-SIBs. the Steering Group’s work will help to inform the calibration of the tlAC requirement. As a key host jurisdiction of global banks and active participant in international regulatory fora, Singapore has been contributing meaningfully to the work on tlAC.

Ms Christine Lagarde, Managing Director of the IMF, showing her appreciation to Mr Tharman Shanmugaratnam, Deputy Prime Minister and Chairman of MAS


MAS is a member of the CpMI-IoSCo Steering Committee and participates actively in the various CpMI-IoSCo initiatives, which develop standards and guidance to enhance the safety and efficiency of financial market infrastructures (FMIs). These include the Implementation Monitoring Standing Group, which assesses the timely, complete and consistent implementation of the CpMI-IoSCo principles for Financial Market Infrastructures, and the policy Standing Group which develops policies relating to FMIs. In addition, MAS co-chairs the Cyber Resilience Working Group that has been tasked to develop guidance on enhancing cyber-resilience of FMIs.

At IoSCo, MAS contributes to the development and implementation of international regulatory standards by actively participating in the standards-setting work of various IoSCo policy Committees, task Forces and Working Groups. In September 2014, MAS was re-elected as a member of the IOSCO Asia-Pacific Regional Committee on the Board of IoSCo.

MAS chaired the IoSCo Working Group on Risk Mitigation Standards for non-Centrally Cleared Derivatives. the working group’s report, which sets out nine risk mitigation standards for non-centrally cleared otC derivatives, was published by IoSCo in January 2015.

MAS also participates in the otC Derivatives Regulators Group, which comprises international regulators working together to resolve cross-border issues in the implementation of otC derivatives reforms.

MAS continues to participate actively as a member of several of the main committees and working groups in the IAIS. In particular, MAS is closely involved in the IAIS’ work on the development of global insurance capital standards, such as the Basic Capital Requirements (BCR), which was endorsed by the G20 in november 2014. From 2015, Global Systemically Important Insurers will report their BCR to their group-wide

MAS was honoured to have Mr Mark Carney, Governor of the Bank of england and Chairman of the Financial Stability Board, deliver the MAS lecture on 17 november 2014.

Mr Carney spoke about “the Future of Financial Reform”. He took stock of the progress that had been made in financial reform since the crisis and observed that the reforms that had been agreed would make the financial system safer, simpler and fairer. He then outlined a vision for the next stage of reform, which would seek to build a financial system that is more diverse, trusted and open, and that would be better able to serve households and businesses.

the MAS lecture is a signature event on MAS’ calendar. It features a distinguished member of the international financial community speaking on a topic of current interest.

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Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, taking questions from the floor during the MAS Lecture chaired by Mr Ravi Menon, Managing Director of MAS


valueD Partner on the international Front

supervisors. MAS also continues to contribute to the development of the Insurance Capital Standard, which is a group-wide risk-based global insurance capital standard. It is designed to achieve greater comparability of the capital requirements of Internationally Active Insurance Groups across jurisdictions at the group-wide level.

MAS continues to participate actively in various task Forces of the BCBS, which are responsible for developing policies that promote a sound global banking system. In the past year, MAS joined the task Force on Standardised Approaches, which focuses on the review of the standardised approach for credit risk. this is to ensure that the standardised approaches continue to be suitable for assessing the capital adequacy of internationally-active banks and banks that are not using the advanced approaches. MAS is also a member of the task Force on Interest Rate Risk in the Banking Book, which is responsible for examining options for capturing interest rate risks in the banking book within the capital framework. In addition, MAS is participating in the BCBS’ review of the existing regulatory treatment of sovereign risk, which will consider policy options to improve the treatment of such exposures.

rEGIONAl FOruMS

ASEAN COOPErATION

MAS is committed to fostering greater regional financial cooperation. MAS and the Bank of thailand co-chair the ASeAn Senior level Committee, which oversees the key work streams for ASeAn financial integration and central banking issues. MAS also chairs the ASeAn Working Committee on Capital Market Development that promotes the development and integration of ASeAn capital markets, with a focus on the development of government and corporate bond markets.

Banking In December 2014, ASeAn central banks agreed on the ASeAn Banking Integration Framework (ABIF). the ABIF aims to achieve a more integrated banking market in ASEAN and provides Qualified ASeAn Banks (QABs) with a platform for greater

market access and operational flexibility. The ABIF will support QABs in playing a more significant role in facilitating intra-ASeAn trade and investment, supporting the realisation of the ASeAn economic Community.

Capital MarketsMAS is an active member of the ASeAn Capital Markets Forum, which supports ASEAN financial integration by pursuing harmonisation of various aspects of securities laws in ASeAn, particularly in the more developed equity markets. MAS is also the co-chair of the ACMI task Force, which aims to operationalise the blueprint to establish clearing, settlement and depository linkages within ASeAn.

In March 2015, MAS signed an Mou with the SGX and securities regulators of Malaysia and thailand to establish a Streamlined Review Framework for the ASeAn Common prospectus. under this framework, issuers planning to offer or list equity or plain debt securities will benefit from a shorter time-to-market and faster access to capital across participating countries.

In August 2014, MAS, the Securities Commission of Malaysia and Securities and exchange Commission of thailand launched the ASeAn CIS Framework to facilitate the cross-border offerings of CIS to retail investors.

InsuranceMAS is an active member of the annual ASeAn Insurance Regulators Meeting (AIRM). AIRM aims to promote closer cooperation and sharing of experience on insurance matters among the ASeAn regulators. the meetings are held annually and hosted on a rotational basis among the ASeAn countries. the 17th AIRM held in Brunei Darussalam discussed capacity building initiatives to improve the supervisory framework of the ASEAN regulators, disaster risk financing and insurance initiatives, as well as priority areas of insurance liberalisation under the ASeAn Framework Agreement on Services.

ASEAN+3

ASeAn+3 members signed the ASeAn+3 Macroeconomic Research office (AMRo)


Agreement on 10 october 2014 to establish AMRo as an international organisation. the signing and subsequent ratification of the AMRO Agreement formalises AMRo’s status as an international organisation headquartered in Singapore. under this agreement, ASeAn+3 members will accord AMRo with the legal status, privileges and immunities for AMRo to carry out its surveillance functions. ASEAN+3 finance ministers and central bank governors have also agreed on the key management positions of AMRo.

AMRo was established in 2011 to provide regional surveillance and analysis of regional economies, and to support effective decision-making for the Chiang Mai Initiative Multilateralisation Agreement, a regional financial safety net. EXECuTIvES’ MEETING OF EAST ASIA-PACIFIC CENTrAl BANKS

MAS continues to play an active role at the Executives’ Meeting of East Asia-Pacific Central Banks (eMeAp). MAS is currently the co-deputy chair of the eMeAp Working Group on Financial Markets and an active member of the other Working Groups on Banking Supervision, and payment and Settlement Systems. MAS’ contributions include leading focused studies on key central banking issues, as well as exchanging views with fellow eMeAp members and industry practitioners on topics relating to the global economy, financial stability and financial regulatory reforms.

ASIA rEGION FuNDS PASSPOrT

In April 2014 and February 2015, Singapore, together with Australia, Korea, new Zealand, thailand and the philippines consulted on the proposed rules and arrangements that will govern the operation of the Asia Region Funds passport. It will facilitate cross-border offers of funds in the Asia-Pacific Economic Cooperation region, and is targeted to be launched in 2016.

IMF-SINGAPOrE rEGIONAl TrAINING INSTITuTE

the IMF-Singapore Regional training Institute (StI) has operated since 1998 as a joint initiative of the Singapore Government and the IMF. MAS

and the Ministry of Foreign Affairs provide funding support to the StI on behalf of the Singapore Government. the StI is the IMF’s training centre in the Asia-Pacific region. It contributes to regional growth and stability by providing high-quality training on macroeconomic and financial management, and related legal and statistical issues to government officials from the region. over the 17 years since it was established, the StI has provided training to more than 10,000 officials from over 40 countries.

TEChNICAl COOPErATION

rEGIONAl AND BIlATErAl TrAINING

MAS contributes to the capacity building of regional central banks and regulatory authorities through structured training and technical cooperation programmes. In 2014, more than 80 participants from 25 countries attended both runs of the MAS Banking Supervisors’ training programme and the MAS-toronto Centre Regional leadership programme for Securities Regulators.

In February 2015, the Central Bank of Myanmar (CBM) and MAS agreed to enter into an Mou that includes technical cooperation and training. MAS conducted an in-country training programme for CBM’s Financial Institutions Supervision Department in Yangon in January 2015. About 30 officials from both sides shared experiences and exchanged views on bank supervision approaches and practices.

MAS also collaborates with other partners such as the South east Asian Central Banks (SeACen) Research and training Centre, Civil Service College and the lee Kuan Yew School of public policy. For instance, MAS hosted in Singapore the SeACen Signature Course on Crisis Management and Resolution, the SeACen-CGFS Workshop on Banking and Regional Financial Integration, and the 16th SeACen Conference of Directors of Supervision of the Asia-Pacific Economies in August 2014. MAS also contributed speakers to several of SeACen’s learning programmes conducted in member countries.


valueD Partner on the international Front

MAS completed a two-year partnership with temasek Foundation to provide customised capacity building for more than 200 participants from the central banks of Cambodia, lao pDR, Myanmar and Vietnam (ClMV). the partnership, implemented in 2013 with funding from the temasek Foundation, included:

• High-level policy dialogues with senior officials of the CLMV central banks;

• A regional banking supervision training programme for mid-level officials; and

• In-country training programmes conducted by MAS.

In 2014, MAS conducted four in-country training programmes in each of the countries, training over 120 participants. the topics covered included banking supervision, monetary policy management and macroprudential surveillance.

MAS-Temasek Foundation regional Training ProgrammeboX 7

MAS trainers with members of The Bank of the Lao PDR at an in-country training programme from 17 to 19 September 2014


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rISK MANAGEMENT AND BuSINESS CONTINuITy

In 2014, the Risk Management Department (RiMD) continued efforts to promote and enhance the risk awareness of staff and foster a vigilant risk culture in MAS. there were also increased engagements and coordination with other government agencies as part of RiMD’s ongoing work to enhance MAS’ resilience and crisis preparedness.

In the cyber security space, MAS strengthened its cyber resilience, in light of the increased frequency of hacking and cyber incidents globally. In terms of pandemic preparedness, MAS closely monitored developments in the spread of Middle east respiratory syndrome coronavirus and ebola, and aligned our pandemic measures with the recommendations given by relevant authorities.

MAS also continued to work with financial institutions to enhance their physical security, crime prevention and business resilience measures. the Financial District Security programme was renamed the Financial Industry Security programme (FISp) to better reflect the actual makeup of the Programme as its members come from across the financial sector, and whose operations in Singapore extend beyond the Central Business District. FISp also reviewed its vision and mandate to focus on three areas: physical security, business continuity management and crime intelligence sharing.

CONTrOlS AND OPErATIONS

AuDIT ASSurANCE

During the year, the Internal Audit Department (IAD) conducted an extensive program of risk-

focused audits to provide audit assurance and ascertain the efficacy of operational processes and controls. It launched an information portal to create greater awareness among staff on new and emerging risks, and deepen stakeholders’ engagement and collaboration. IAD also continued to leverage technology solutions to enhance audit processes and strengthen its data analytics capabilities to attain a wider audit coverage and more in-depth analysis. In 2015, it will be conducting an internal Quality Assurance Review to ensure that its audit practices continue to be in line with the established standards.

PrOCurEMENT MANAGEMENT

ensuring a transparent, open and fair procurement process is of paramount importance. MAS has reviewed its procurement practices and put in place new controls to further enhance its procedures. MAS has also implemented new initiatives to further raise awareness of procurement best practices.

SECurITy AND FIrE SAFETy

the security systems’ capability and security operations in MAS have been further enhanced with the interfacing of the Visitor Management System and the lift system. this provides better traffic management and a seamless flow.

to keep abreast of the evolving security landscape, MAS is constantly looking out for new technologies and measures to deal with emerging risks and threats.

MAS joined the Global Heads of Security Group, comprising representatives from central banks around the world, at the invitation of the Bank of england. By participating in their annual meetings, MAS


has gained invaluable knowledge and insights into how other central banks deal with security threats.

BuIlDING SErvICES AND INFrASTruCTurE

MAS is in the process of compacting offices to optimise space usage and enhance work synergy between functional work units. to date, office renovations for the entire Financial Supervision Group, economic policy Group and Information technology Department have been completed, together with the upgrading of the MAS building’s lift and power systems. As part of Whole-of-Government environmental sustainability efforts, other building infrastructures and services will be progressively upgraded by 2017 to meet new building requirements and energy standards.

ENhANCING PrODuCTIvITy AND BuIlDING CAPABIlITIES

STAFF MOBIlITy AND PrODuCTIvITy

Improving staff mobility and productivity was a key focus in 2014 and 2015, which saw the launch of the following initiatives:

• the Document Management System (DMS), which allows staff to create, manage, find and share information easily. Besides improving staff productivity, DMS also facilitates staff collaboration and enhances knowledge sharing within MAS.

• the Financial Institution Relationship Management system, which equips our supervisors with a one-stop access to key information and their latest interactions with the financial institutions.

• the provision of secure video and voice call

capabilities on MAS-issued mobile devices. Staff on overseas assignments can make video or voice calls from these devices to colleagues without incurring expensive overseas call charges.

• the introduction of a mobile office toolkit to assist staff on inspections, comprising

lightweight yet functional It equipment such as a portable scanner, a mobile broadband router and a projector. this allows them to digitise and send documents securely via MAS’ corporate network to their colleagues in office and reduces the need to transport bulky paper documents from one location to another.

rEINFOrCEMENT OF MAS’ IT SECurITy INFrASTruCTurE

Cyber security events with increasing complexities have been on the rise since 2013. As part of MAS’ continuous efforts to strengthen its cyber defences and protect valuable information assets, MAS’ It security infrastructure was reinforced with new capabilities to detect anomalies and prevent cyber-attacks.

DATA GOvErNANCE AND ANAlyTICS

MAS recognises the importance of data in the modern economy. new data analytics tools provide policymakers and firms with better support for their decision making processes. to improve its capabilities in the governance, usage and management of data, MAS has established a Data Governance and Analytics (DGA) unit. As part of its responsibilities, the DGA will work with international colleagues on standards for the provision of data, taking into consideration the regulatory burden on financial institutions.

As part of this focus on data analytics, MAS implemented the Business Intelligence and Decision Support system in 2014, which facilitates the reporting and analysis of data collected from financial institutions. The system enhances MAS’ data analytics capabilities and staff productivity.

BuIlDING A STrONG MAS FAMIly

lEADErShIP DEvElOPMENT

Developing strong leaders in MAS is key to sustaining our values and culture, and driving high performance within the organisation. As a multi-faceted specialist organisation, MAS has development pathways to groom both specialist leaders and managerial leaders.


presently, MAS has three in-house milestone development programmes. the Young professionals programme (Ypp) is a development programme offered to officers at an early stage of their careers to help them acquire skills in influencing, communications, giving effective feedback and strengthening workplace collaboration. the 14th Ypp run was conducted in 2015.

the people leadership programme, which is into its 6th run, is a programme designed for new team leads to equip them with the people-centric leadership skills needed for their roles. these include self-awareness, situational leadership, conflict management and building high performance teams. A series of workshops was also held in 2014 for team leads and above to better manage teams on flexible work arrangements.

the third milestone programme is the MAS Management programme (MMp). It is targeted at Division Heads and Specialist leaders focusing on areas such as leadership development, policy formulation and stakeholder engagement. the MMp aims to help leaders appreciate MAS’ role in the larger ecosystem of national governance. It also aims to develop our leaders’ capabilities in leading through more self-awareness, with emphasis on developing people, who are MAS’ highly valued assets.

MAS also invests in equipping our supervisors with skills to effectively coach their team members for personal development and work performance. We have grown our internal pool of professionally trained and certified coaches to 24. these coaches provide professional

one mas: inteGrateD anD Cohesive

coaching to staff including those taking on leadership responsibilities for the first time.

to further strengthen the culture of feedback, and allow leaders to regularly gain insights on their strengths and development areas, MAS commenced a roll-out of a 360 leadership Survey for all its managers. FuNCTIONAl AND GENErAl TrAINING

the MAS Academy offers a comprehensive suite of learning and development programmes, designed to support the strategic imperatives of MAS. the programmes are designed along the key functional and inter-functional competencies, defined by the professional Requisites and outcomes Framework, and the Capacity, leadership, Interpersonal skills and personal attributes Framework. In addition to building competencies, young officers enrol in the MAS Diploma, a three-year flagship programme, for a broad-based education in MAS’ key functions.

ATTAChMENTS AND SECONDMENTS

In addition to a wide range of training programmes, we also develop our officers through attachments and secondments to supranational organisations, foreign supervisors and the financial industry. These provide our officers with valuable opportunities to acquire technical expertise, learn supervisory best practices and keep closer pace with trends and developments in the financial sector.

rECOGNITION OF STAFF

Service Appreciation Awardsthe Service Appreciation Award (SAA) recognises and celebrates the loyalty and contributions of our dedicated staff. the awards ceremony was held on 8 August 2014. In all, 139 staff received the SAA for service in MAS ranging from five years to 40 years. nine staff received the 40-year award and one of the recipients, Chua Koh Beng from the Corporate Services Department (CSD), remarked, “I would like to extend my heartfelt thanks to Management and all my MAS Colleagues for their support and trust in me to deliver my work. this 40-year SAA has a special meaning to me. It signifies an important milestone in my career with MAS. I am fortunate to be given ample opportunities to learn and share together with the rest of the team within the CSD, and across other

Ms Teo Swee Lian, former MAS Special Advisor (second from right), interacting with Middle Management Programme participants during a leadership development activity on 19 March 2015


departments. This has enhanced my confidence in managing my work and handling customers.”

National Day Awardsthis year, 10 MAS staff were honoured for their contributions and service to the nation. Among the recipients were Assistant Managing Director and Chief economist edward Surendran Robinson and Assistant Managing Director Chua Kim leng who were conferred the public Administration (Silver) Medal. We extend our heartiest congratulations to all our national Day Award recipients. Tribute to Pioneersto pay tribute to MAS pioneers for their contributions during MAS’ formative years, a special reunion event was held in their honour on 16 August 2014, coinciding with the MAS Annual Dinner. over 200 MAS pioneers past and present, and their guests, joined MAS’ Chairman, Board members and staff for an evening of fun, entertainment and a walk down memory lane.

TrIBuTE TO Mr lEE KuAN yEW

Singapore’s founding prime Minister, Mr lee Kuan Yew, died on 23 March 2015, at the age of 91.

MAS paid tribute to Mr lee at a special ceremony on 26 March 2015. Mr lee’s foresight of Singapore’s potential for financial services laid the foundation for our thriving role today as an international financial centre. the tribute event was attended by long serving MAS staff, and current and past MAS Board Members and senior management. DpM and MAS Chairman tharman Shanmugaratnam, Minister Heng Swee Keat, Managing Director Ravi Menon, Mr JY pillay and Mr ng Kok Song shared their personal reflections on Mr Lee and his contributions to Singapore at the event.

MAS staff penned many meaningful tributes in remembrance of Mr Lee, reflecting on what Mr Lee had done for Singapore and how Singaporeans can continue to build on his legacy.

BrINGING Our PEOPlE ClOSEr

the 42nd and 43rd MAS Recreation Club Committees created more opportunities for staff to come together and bond meaningfully. this included monthly lunch or tea gatherings on a Friday, where guest speakers share about topics of interest including health and wellness, sports, and community service. We are also organising activities to celebrate the 50th year of Singapore’s independence in 2015, and continue to encourage greater staff involvement in special interest groups.

Mr Tharman Shanmugaratnam, Deputy Prime Minister and Chairman of MAS, and Mr Ravi Menon, Managing Director of MAS, with MAS Pioneers at the Reunion Tribute event on 16 August 2014

Remembering our founding father, Mr Lee Kuan Yew


Community Service throughout the year, MAS staff organised community service events in support of the needy elderly and special needs youths. Staff held block parties for the elders, took them out for excursions, and helped to spring clean their homes. For the youths, staff held mock interview sessions to coach them in job-search skills.

Community Service Bazaars the Community Sub-committee organised two in-house charity bazaars to raise funds for MAS’ adopted beneficiaries. In the weeks leading up to the bazaar held in november 2014, department representatives circulated emails advertising a variety of food items, games, children’s books, and even singing telegram services. on the actual day, staff formed a large crowd in the MAS penthouse to have lunch, join in the fun, and contribute by giving to help the less fortunate.

National Day Celebration MAS celebrated Singapore’s 49th birthday on 8 August 2014 with the theme “our Shared Memories”. Staff enjoyed the nostalgia-filled games, exciting performances, sumptuous tea, and recognised long-serving colleagues in an award ceremony.

Annual Dinner MAS staff and pioneers came together on 16 August 2014 at Resorts World Sentosa decked in dazzling hues. the theme of the 2014 Annual Dinner was “neon Fashion parade”. It was a night of good fun and bonding, with plenty of colour, games, magic and fire.

Inter-Central Bank Gamesthe Inter-Central Bank Games were held from 18 to 21 September 2014 at Chiang Mai, thailand. MAS’ representatives competed against their central bank counterparts in run-and-swim, women’s frisbee, men’s futsal, mind games and virtual games. MAS clinched an overall third placing after an intense day of competition.

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Kidz@Work on 24 December 2014, over 100 children of MAS staff enjoyed themselves at the annual MAS Kidz@Work event. Many children came dressed in costumes of their favourite cartoon characters. they cheered staff who gamely performed a musical based on recent popular children’s movies. the children were then treated to a carnival with a free flow of popcorn and candy floss, and a wide range of game stations.

Family Dayon the morning of 14 March 2015, about 400 colleagues and family members escaped from the hustle and bustle of cosmopolitan city life to Gardenasia in the rustic Kranji farmlands. everyone had the opportunity to build their own terrariums, give old t-shirts a new lease of life by transforming them into tote bags and indulge in kampong fishing using bamboo rods. More importantly, it was a chance to bond with their families and to catch up with colleagues’ families while enjoying life’s simple pleasures.


Family Dayon the morning of 14 March 2015, about 400 colleagues and family members escaped from the hustle and bustle of cosmopolitan city life to Gardenasia in the rustic Kranji farmlands. everyone had the opportunity to build their own terrariums, give old t-shirts a new lease of life by transforming them into tote bags and indulge in kampong fishing using bamboo rods. More importantly, it was a chance to bond with their families and to catch up with colleagues’ families while enjoying life’s simple pleasures.

As part of the year-long celebrations of Singapore’s jubilee year, the 43rd MAS Recreation Club Committee incorporated SG50 elements into MAS-wide activities. these activities include Family Day in March 2015, and our upcoming Annual Dinner and national Day Celebration 2015. Such events allow staff to reflect on our nation building journey together and celebrate what makes us Singaporean. Through reflection and celebration, we hope to inspire staff to continue contributing to Singapore’s success.

In December 2014, MAS organised our very own SG50 t-shirt Design Competition. the competition brought out the creative side of MAS staff as impressive pieces poured in over the month. the winning design, as voted by staff, aptly captured images of the financial sector and MAS’ integral role in its development. Staff took pride in wearing t-shirts printed with the winning design at MAS-wide events, such as MAS Carnival.

MAS Carnival on 9 June 2015 was our first-ever event to combine sports and community service. the Carnival aimed to not only encourage friendly competition, but also to bring MAS staff closer together. Some staff raised funds for community services activities through game booths and the sale of snacks. others were actively involved in team sports, relays, fringe activities, or simply cheering their fellow colleagues.

MAS will also be opening a permanent gallery for the public in September 2015. the MAS Gallery will give the public a better understanding of MAS’ roles and functions. It will also engage and educate the community on topics affecting their everyday lives, such as inflation, financial literacy, and managing debt, as well as important policies that have impacted our financial sector.

“50 years is a momentous occasion, hence I drew inspiration from our Singapore skyline in coming up with the shirt design. Apart from being well known globally, our city’s skyline has been an important barometer of progress for the financial sector over the past 50 years. MAS’ integral role in ensuring prudent yet progressive growth is represented by the MAS Building silhouette, rising to meet new challenges as our financial centre continues to grow. The tagline ‘Sound, Stable, Strategic’ provides a clear, succinct statement of the kind of financial centre we aspire to build and uphold in the next 50 years to come and beyond.”

-Spencer Hsu, Winner of the SG50 T-shirt Design Competition

SG50 Celebrations in MASboX 8

74 Financial Statement Highlights

75 Statement by Directors

76 Auditor’s Report

78 Consolidated Statement Of Comprehensive Income

79 Consolidated Balance Sheet

80 Consolidated Statement of Changes in Equity

81 Consolidated Cash Flow Statement

82 Statement of Backing of Currency in Circulation

83 Notes to the Consolidated Financial Statements

financial statements

MaS fY2014/2015 FInanCIaL statement HIGHLIGHts

During the financial year ended 31 March 2015, the Authority’s total assets, including the Currency Fund, increased by 1.8% to $387.39 billion mainly due to higher foreign financial assets and receivables. Total liabilities increased in tandem, by 1.9% to $346.73 billion, as the currency-in-circulation grew and MAS bill issuance increased, partially offset by lower money market borrowings and deposits of financial institutions.

The Currency Fund’s net external assets grew by 7.1% to $46.18 billion, backing the currency-in-circulation by 125%, compared to 127% a year ago.

Including currency translation effects, the Authority recorded a net profit of $0.28 billion in Singapore dollar terms. The negative translation effect arose as the Singapore dollar strengthened against the Euro and Yen by 17.6% and 6.7% respectively, which more than offset translation gains as the Singapore dollar weakened by 8.3% against the US dollar.

The Authority’s total expenditure rose by 31.2% to $1.20 billion, stemming from the higher investment and interest expenses.

Based on the framework for Contributions to Consolidated Fund, no contribution to the Consolidated Fund is required for this financial year as there are carried forward losses from previous financial years to offset against the net profit for the year. The net profit for the year will not be returned to the Singapore Government but will be added to the Authority’s reserves, in accordance with the Monetary Authority of Singapore Act.


StateMent bY DirectorSFor the Financial year ended 31 March 2015

In the opinion of the directors,

(a) the consolidated financial statements of the Authority and its wholly-owned subsidiary, Singapore Sukuk Pte Ltd, as set out on pages 78 to 102 are drawn up so as to present fairly the state of affairs of the Authority as at 31 March 2015, the results and changes in equity of the Authority for the financial year ended on that date, and of the cash flows of the Authority for the financial year then ended; and

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

On behalf of the Board of Directors,

THARMAN SHANMUGARATNAMChairman

RAVI MENONManaging Director

23 June 2015


The accompanying financial statements of the Monetary Authority of Singapore (the “Authority”), its subsidiary and Currency Fund, set out on pages 78 to 102, have been audited under my direction. These financial statements comprise the consolidated balance sheet as at 31 March 2015, the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated cash flow statement and statement of backing of currency in circulation for the financial year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT’S RESpONSIBIlITy FOR THE FINANCIAl STATEMENTS

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

AUDITOR’S RESpONSIBIlITy

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

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

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

inDePenDent aUDitor’S rePort on tHe aUDit of tHe financial StateMentS of tHe MonetarY aUtHoritY of SinGaPore FOR THE FINANCIAL YEAR ENDED 31 MARCH 2015


OpINION

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

Having regard to the power given to the Authority under section 34(3) of the Monetary Authority of Singapore Act and section 21(10) of the Currency Act, in my opinion, the consolidated financial statements present fairly, based on the framework of accounting standards adopted by the Authority, the state of affairs of the Authority and its subsidiary as at 31 March 2015 and the financial transactions of the Authority and its subsidiary for the financial year ended on that date.

TAN yOKE MENG WIllIEAUDITOR-GENERALSINGAPORE

24 June 2015


conSoliDateD StateMent of coMPreHenSiVe incoMe

General Reserve Fund

Currency Fund Total

For the year ended 31 Marchin $ millions

Note 2015 2014 2015 2014 2015 2014

Income/(Loss) from Foreign Operations [after transfers to/from provisions] 4 (1,902) 13,958 3,072 2,535 1,170 16,493

Income from Domestic and Other Operations 5 291 246 11 5 302 251

Non-operating Income 6 11 9 – – 11 9

Total Income/(loss) [after transfers to/from provisions] (1,600) 14,213 3,083 2,540 1,483 16,753

Less:

Investment, Interest and Other Expenses 7 798 541 102 89 900 630

Personnel Expenditure 8 220 210 – – 220 210

General and Administrative Expenditure 9 60 55 – – 60 55

Depreciation/Amortisation 16 22 21 – – 22 21

Total Expenditure 1,100 827 102 89 1,202 916

Profit/(Loss) for the Year [after transfers to/from provisions] (2,700) 13,386 2,981 2,451 281 15,837

Less:

Contribution to Consolidated Fund 19.2 – – – – – –

Net Profit/(Loss) and Total Comprehensive Income/(loss) for the year [after transfers to/from provisions] (2,700) 13,386 2,981 2,451 281 15,837

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


conSoliDateD balance SHeet

As at 31 March in $ millions

Note 2015 2014

CApITAl AND RESERVES

Issued and Paid-up Capital 10 25,000 25,000

General Reserve Fund 11 6,455 6,115

Currency Fund Reserves 12 9,202 9,261

40,657 40,376

Represented by:

ASSETS

Cash and Bank Balances 876 882

Singapore Dollar Securities 13 7,723 7,007

Foreign Financial Assets 14 363,644 360,026

Gold 290 266

Other Assets 15 14,668 12,093

Property and Other Fixed Assets 16 184 176

387,385 380,450

Less:

lIABIlITIES

Currency in Circulation 36,979 33,859

Deposits of Financial Institutions 17 25,783 34,357

MAS Bills 18 97,281 76,337

Foreign Financial Liabilities 14 16,433 15,487

Provisions and Other Liabilities 18 54,137 64,303

Amounts Due to Singapore Government 19 116,115 115,731

346,728 340,074

NET ASSETS OF THE AUTHORITy 40,657 40,376




conSoliDateD StateMent of cHanGeS in eQUitY

in $ millions

Issued and paid-up Capital

General Reserve

Fund

Currency Fund

Reserves Total

Balance as at 1 April 2013 25,000 (7,082) 6,621 24,539

Total Comprehensive Income for the Year (after transfers to/from provisions) – 13,386 2,451 15,837

Transfer of Reserves to Currency Fund – (189) 189 –

Balance as at 31 March 2014 25,000 6,115 9,261 40,376

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

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

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



conSoliDateD caSH floW StateMent

For the year ended 31 Marchin $ millions

2015 2014

Cash Flows from Operating Activities

Profit for the Year (after transfers to/from provisions) 281 15,837

Adjustments for: Depreciation/Amortisation of Fixed Assets and Other Assets 22 21

Profit before Working Capital Changes 303 15,858

(Increase)/Decrease in Singapore Dollar Securities (716) 108 Foreign Financial Assets (3,618) (17,403) Gold (24) (4) Other Assets (2,575) (1,277)

Increase/(Decrease) in Deposits of Financial Institutions (8,574) 12,700 MAS Bills 20,944 34,761 Foreign Financial Liabilities 946 (5,954) Provisions and Other Liabilities (10,169) 7,340 Amounts due to Singapore Government

(excluding Contribution to Consolidated Fund and Return of Profit to Singapore Government) 384 (48,368)

Net Cash used in Operating Activities (3,099) (2,239)

Cash Flows from Investing ActivitiesPurchase of Fixed Assets (27) (30)

Net Cash used in Investing Activities (27) (30)

Cash Flows from Financing ActivitiesIncrease in Currency in Circulation 3,120 2,293

Net Cash from Financing Activities 3,120 2,293

Net (Decrease)/Increase in Cash and Bank Balances (6) 24

Cash and Bank Balances as at beginning of the year 882 858

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


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

As at 31 Marchin $ millions

Note 2015 2014

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

Currency in Circulation 12.2 36,979 33,859

External Assets 12.2 48,039 45,229

Less:

Foreign Financial Liabilities 12.2 1,668 1,753

Provisions and Other Liabilities 12.2 190 356

1,858 2,109

Net External Assets 46,181 43,120

StateMent of bacKinG of cUrrencY in circUlation



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2015

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

1 GENERAl

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

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

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

2 pRINCIpAl ACTIVITIES

2.1 The principal activities of the Authority are:

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

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

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

3 SIGNIFICANT ACCOUNTING pOlICIES

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

a) The consolidated financial statements of the Authority, are prepared in accordance with

the Monetary Authority of Singapore Act (Cap. 186, 1999 Revised Edition), Currency Act (Cap. 69, 2002 Revised Edition) and applicable Singapore Financial Reporting Standards (FRS). Section 34(3) of the Monetary Authority of Singapore Act and Section 21(10) of the Currency Act provide that the Authority, in preparing its consolidated financial statements,



may comply with accounting standards to the extent that it is, in the opinion of the Authority, appropriate to do so, having regard to the objects and functions of the Authority. The Authority, having considered its responsibilities for managing the Singapore dollar exchange rate and the official foreign reserves, is of the opinion that, for effective management of Singapore’s monetary policy, it is appropriate not to meet, in some respects, the Singapore Financial Reporting Standards. The consolidated financial statements accordingly disclose less information than would be required under those Standards.

b) The following new or revised FRSs relevant to the Authority are applicable in the current financial year.

FRS 110 Consolidated Financial Statements

FRS 110 establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more entities. It replaces all of the guidance on control and consolidation in FRS 27 “Consolidated and Separate Financial Statements” and INT FRS 12 “Consolidation – Special Purpose Entities”. Control exists under FRS 110 when the investor has power, exposure or rights to variable returns and the ability to use that power to affect its returns from the investee.

FRS 112 Disclosure of Interests in Other Entities

FRS 112 requires disclosure of information that enables the evaluation of the nature, risks and financial effects associated with the entity’s interests in (a) subsidiaries, (b) associates, (c) joint arrangements and (d) unconsolidated structured entities.

INT FRS 121 Levies

INT FRS 121 sets out the accounting principles for an obligation to pay a levy to the Government that is not income tax and whose timing and amount is certain. Specifically, a liability should be recognised only when the activity that triggers the payment of the levy occurs.

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

d) The preparation of consolidated financial statements in conformity with FRS requires

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

3.2 Basis of Accounting

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



3.3 Basis of Consolidation

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

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

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

3.4 Foreign Currency Translation

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

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

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

3.5 Recognition and Derecognition

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

3.6 Income Recognition

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

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



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

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

3.7 Singapore Dollar Securities

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

3.8 Gold

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

3.9 Foreign Financial Assets and liabilities

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

3.10 Financial Derivatives

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

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

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

3.12 property, Other Fixed Assets and Depreciation

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



Useful livesLeasehold Land Period of leaseBuildings 50 years or period of lease whichever is lowerBuilding Improvements 10 yearsComputer Hardware and Software 3 to 5 yearsFurniture, Fixtures, Motor Vehicles

and Other Equipment 3 to 5 years

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

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

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

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

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

3.13 Operating leases

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

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

3.14 Employee Benefits

a) Defined contribution plans

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



b) Employee leave entitlement

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

4 INCOME/(lOSS) FROM FOREIGN OpERATIONS

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

5 INCOME FROM DOMESTIC AND OTHER OpERATIONS

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

6 NON-OpERATING INCOME

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

7 INVESTMENT, INTEREST AND OTHER ExpENSES

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

8 pERSONNEl ExpENDITURE

8.1 This includes the following:

in $ millions 2015 2014

Salaries 187 182

Employer’s Contribution to the Central Provident Fund 18 16

Staff Benefits and Training 10 9

The Minister-in-charge of the Authority is not paid a salary by the Authority. Directors’ fees for the year totalled $0.12 million (2014: $0.11 million). All Ministers serving on the Authority’s Board of Directors do not receive directors’ fees.



8.2 The key management personnel compensation is as follows:


Salaries and Other Short-term Employee Benefits 20 22

Other Long-term Employee Benefits 4 4

Post-employment benefits of $0.6 million (2014: $0.6 million) were also provided to key management personnel.

Executive Directors, Department Heads and above, are considered as key management personnel

for this purpose.

9 GENERAl AND ADMINISTRATIVE ExpENDITURE

This includes the following:


Information Technology 12 12

Information Resources 6 6

Rental and Maintenance 5 5

Travel and Accommodation 5 4

IT Operating Lease 5 4

Audit Fee 1 1

10 CApITAl AND RESERVES

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

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

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



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

11 GENERAl RESERVE FUND

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

12 CURRENCy FUND RESERVES

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

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

in $ millions Note 2015 2014

External Assets

Gold 227 208

Foreign Investments 14.1 47,812 45,021

48,039 45,229

Less:

liabilities

Active Currency in Circulation 36,130 33,002

Currency Held by the Authority 849 857

Currency in Circulation 36,979 33,859

Foreign Financial Liabilities 14.1 1,668 1,753

Provisions and Other Liabilities 190 356

1,858 2,109

38,837 35,968

Currency Fund Reserves 9,202 9,261



13 SINGApORE DOllAR SECURITIES

Singapore Dollar Securities comprise:


Singapore Government Bonds 7,713 6,997

Singapore Dollar Corporate Bonds 10 10

7,723 7,007

14 FOREIGN FINANCIAl ASSETS AND lIABIlITIES

14.1 These comprise the following:

Note

General Reserve Fund Currency Fund Total

in $ millions 2015 2014 2015 2014 2015 2014

Foreign Investments

Bank Balances and Deposits 48,305 63,553 5,079 2,322 53,384 65,875

Securities (including Treasury Bills, Bonds and Equities) 257,089 242,801 40,981 40,868 298,070 283,669

Other Foreign Investments 7,375 5,521 1,752 1,831 9,127 7,352

International Monetary Fund (IMF) Assets 14.2

Reserve Tranche 1,058 1,010 – – 1,058 1,010

Special Drawing Rights 1,654 1,698 – – 1,654 1,698

Loans under New Arrangements to

Borrow 21.1(d) 247 318 – – 247 318

Poverty Reduction and Growth Facility – Heavily Indebted Poor Countries 8 8 – – 8 8

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

Foreign Financial Assets 315,832 315,005 47,812 45,021 363,644 360,026

Foreign Financial liabilities 14,765 13,734 1,668 1,753 16,433 15,487



14.2 International Monetary Fund (IMF) Assets

The Reserve Tranche represents the amount of the paid-up portion of the Singapore quota. Special Drawing Rights (SDRs) are interest-yielding balances with IMF that can be exchanged for convertible currencies. Singapore participates in the Poverty Reduction and Growth Facility-Heavily Indebted Poor Countries (PRGF-HIPC). The PRGF-HIPC outstanding balance as at 31 March 2015 is SDR4.0 million [$7.7 million] (31 March 2014: SDR4.0 million [$7.9 million]), being the balance in Post-Special Contingent Account-2 with IMF which was transferred to the PRGF-HIPC on 24 April 2001 as an interest-free deposit maturing at the end of 2018.

14.3 Bank For International Settlements (BIS)

The Authority’s shareholding in the BIS comprises the 25% paid-up value of 4,285 (31 March 2014: 4,285) shares with a nominal value of SDR5,000 ($9,462) (31 March 2014: SDR5,000 [$9,719]) each.

15 OTHER ASSETS

These comprise the following:


Loans, Deposits and Other Receivables 6,484 6,883

Receivable from MAS Bills Issued 5,387 1,997

Repurchase Agreements with Singapore Government 2,797 3,213

14,668 12,093



16 pROpERTy AND OTHER FIxED ASSETS

in $ millionsleasehold

land Buildings

Building Improve-

ments

ComputerHardware

and Software

Furniture, Fixtures,

Motor Vehicles

and Other Equipment

Work-in- progress Total

COST

As at 1.4.2013 48 171 94 111 28 10 462

Additions – – – – 1 24 25

Disposals – – – (4) – – (4)

Transfers – – – 10 – (10) –

As at 31.3.2014 48 171 94 117 29 24 483

ACCUMUlATED DEpRECIATION

As at 1.4.2013 16 83 88 78 25 – 290

Disposals – – – (4) – – (4)

Depreciation Charge 1 5 3 11 1 – 21

As at 31.3.2014 17 88 91 85 26 – 307

NET BOOK VAlUE AS AT 31.3.2014 31 83 3 32 3 24 176

COST

As at 1.4.2014 48 171 94 117 29 24 483

Additions – – – 4 1 26 31

Disposals – – – (6) (2) – (8)

Transfers – – 13 13 – (26) –

As at 31.3.2015 48 171 107 128 28 24 506

ACCUMUlATED DEpRECIATION

As at 1.4.2014 17 88 91 85 26 – 307

Disposals – – – (6) (1) – (7)

Depreciation Charge 1 4 3 12 2 – 22

As at 31.3.2015 18 92 94 91 27 – 322

NET BOOK VAlUE AS AT 31.3.2015 30 79 13 37 1 24 184



17 DEpOSITS OF FINANCIAl INSTITUTIONS


Banks 22,635 31,901

Finance Companies 359 330

Securities Companies 9 8

23,003 32,239

International Financial Institutions 459 25

Foreign Central Banks and Others 2,321 2,093

25,783 34,357

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

18 MAS BIllS, pROVISIONS AND OTHER lIABIlITIES

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

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

18.3 The Authority’s allocations of Special Drawing Rights in IMF amounting to $1,408 million as at 31 March 2015 (31 March 2014: $1,447 million) is included in “Provisions and Other Liabilities”.

18.4 During the financial year ended 31 March 2015, SSPL, a wholly-owned subsidiary of the Authority, issued $140 million (2014: $110 million) Sukuk trust certificates with one year maturity and an income distribution rate of 0.39% (2014: 0.28%) per annum. The Sukuk issuance by SSPL is structured on the sale-and-leaseback or Al Ijarah of property assets of the Authority. Under agreements with SSPL, the Authority will sell, leaseback, provide a purchase undertaking of the property assets and receive from and make periodic payments to SSPL.



19 AMOUNTS DUE TO SINGApORE GOVERNMENT

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


Amounts due to Singapore Government, arising from Repurchase Agreements 2,797 3,213

Balances and Deposits of Singapore Government 113,318 112,518

116,115 115,731

19.2 Contribution to the Consolidated Fund is in accordance with the Statutory Corporations (Contributions to Consolidated Fund) Act (Cap. 319A, 2004 Revised Edition) and is based on 17% (2014: 17%) of the net profit for the year. In the financial year ended 31 March 2015, no contribution to the Consolidated Fund (2014: $nil) is payable as the cumulative loss from previous financial years is brought forward and offset against the net profit for the year.

20 STATUTORy DEpOSITS OF INSURANCE COMpANIES, REMITTANCE lICENSEES AND CApITAl MARKETS SERVICES lICENSEES

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

21 COMMITMENTS

21.1 International Monetary Fund (IMF)

a) The Authority has an obligation to pay $1,669 million as at 31 March 2015 (31 March 2014: $1,669 million) which represents the unpaid portion of the Singapore quota due to IMF under Section 4 of Article III of the Articles of Agreement.

b) On 15 December 2010, the IMF’s Board of Governors passed a resolution that would double the Fund’s total quotas and result in a major realignment of quota shares among members. Singapore accepted its full quota increase of SDR2,484 million ($4,701 million) (31 March 2014: SDR2,484 million [$4,828 million]) on 31 October 2011.



c) On 20 April 2012, the Authority announced that Singapore would make a bilateral contingent loan of US$4.0 billion ($5.5 billion) (31 March 2014: US$4.0 billion [$5.0 billion]) to the IMF as part of the broader international effort to boost IMF’s resources and strengthen global economic and financial stability.

d) As a participant in the IMF’s ‘New Arrangements to Borrow’ (NAB), the Authority undertakes to provide a credit line in the event of a financial emergency as specified by the NAB. As at 31 March 2015, the loans granted by the Authority under the NAB totalled SDR131 million ($247 million) (31 March 2014: SDR163 million [$318 million]). The remaining undrawn credit is SDR1,146 million ($2,169 million) as at 31 March 2015 (31 March 2014: SDR1,114 million [$2,165 million]).

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

21.2 Bank for International Settlements (BIS)

The Authority has a commitment, amounting to SDR16.1 million ($30.5 million) as at 31 March 2015 (31 March 2014: SDR16.1 million [$31.3 million]), in respect of the uncalled portion of its shareholding in the BIS.

21.3 Repurchase Agreements with Central Banks and Monetary Authority

The Authority entered into bilateral repurchase agreements totalling US$5,500 million ($7,545 million) (31 March 2014: US$5,500 million [$6,917 million]) with various Asian central banks and a monetary authority to provide liquidity assistance in times of emergency. For the financial year ended 31 March 2015, there was no request for liquidity assistance from any counterpart.



21.4 Currency Swap Arrangements with Central Banks and Monetary Authority

a) The Authority is a participant in the multilateral ASEAN Swap Arrangement (ASA) together with other ASEAN central banks and a monetary authority to provide short-term foreign exchange liquidity support for member countries that may experience balance of payments difficulties. In November 2013, the ASA was renewed for an additional two years up to 16 November 2015. Under this agreement, the Authority’s commitment is US$300 million ($412 million) (31 March 2014: US$300 million [$377 million]).

b) The Authority is Singapore’s Swap Providing / Requesting Party in the Chiang Mai Initiative Multilateralisation (CMIM) Agreement involving the ASEAN member states, China (including the Hong Kong Monetary Authority, China), Japan and Korea. The CMIM Agreement, effective from 24 March 2010, provides financial support through currency swap transactions, to address balance of payments and short-term liquidity difficulties in the region, and supplements existing international financial arrangements. In May 2012, the Chiang Mai Initiative Multilateralisation (CMIM) members agreed to strengthen the regional financial safety net and double the total size of the currency swap transactions with members to US$240 billion. The Authority’s commitment is US$9,104 million ($12,489 million) (31 March 2014: US$9,104 million [$11,449 million]) and the Authority can swap Singapore dollars for US dollars up to 2.5 times Singapore’s commitment.

c) The Authority established a 3-year China-Singapore currency swap arrangement of CNY150 billion ($30 billion) with the People’s Bank of China on 23 July 2010, to promote bilateral trade and direct investment for the economic development of the two countries. On 8 March 2013, the Authority renewed and expanded the swap arrangement to CNY300 billion ($60 billion). This arrangement allows the Authority to provide Chinese Yuan liquidity to financial institutions for trade and financial stability purposes. As at 31 March 2015, the Authority has a currency swap of CNY10 billion ($2.2 billion) (31 March 2014: CNY10 billion [$2.0 billion]) with People’s Bank of China.

d) Aside from this CNY swap, there was no other drawdown of any of the currency swap arrangements, (a) and (b), in financial years ended 31 March 2014 and 31 March 2015.



21.5 liquidity loan Facility

The Authority entered into an agreement with the Singapore Deposit Insurance Corporation Limited (SDIC) on 9 February 2012 where the Authority may provide the SDIC a contingent liquidity facility of up to $20 billion (31 March 2014: $20 billion), in the event a Deposit Insurance Scheme member fails and liquidity is needed for compensation payments to insured depositors. There was no request and drawdown on the facility in financial years ended 31 March 2014 and 31 March 2015.

21.6 Capital Expenditure Commitments

Capital expenditure not provided for in the consolidated financial statements is as follows:


Amount contracted for 19 31

21.7 leases

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


Less than 1 year 1 1

1 to 5 years 2 3

3 4

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


Less than 1 year 8 8

1 to 5 years 6 10

14 18



22 FINANCIAl RISK MANAGEMENT

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

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

22.3 Market Risk

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

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

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

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

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



22.4 Credit Risk

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

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

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

22.5 Country Risk

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

22.6 liquidity Risk

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

23 RElATED pARTy TRANSACTIONS

23.1 The Financial Sector Development Fund (the “Fund”) maintained a non-interest bearing current account with the Authority to facilitate grant disbursements. The Fund’s current account balance with the Authority as at 31 March 2015 was $0.4 million (31 March 2014: $1.1 million).



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

in $ thousands 2015 2014

Interest Expense 282 193

The Fund’s deposit balance with the Authority as at 31 March 2015 was $126 million (31 March 2014: $nil).

24 SEGMENT REpORTING

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

25 NEW OR REVISED ACCOUNTING STANDARDS AND INTERpRETATIONS

New or revised accounting standards and interpretations to existing standards have been issued that are relevant for the Authority’s accounting periods beginning after 1 April 2014 or later periods and which the Authority has not early adopted. The Authority does not expect the following revised accounting standards that are applicable, to have a significant impact on the Authority’s consolidated financial statements.

Effective for annual periods beginning on or after 1 January 2016

Amendments to FRS 1: Disclosure Initiative

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

Amendments to FRS 16 Property, Plant and Equipment

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



26 AUTHORISATION OF CONSOlIDATED FINANCIAl STATEMENTS

The consolidated financial statements for the year ended 31 March 2015 were authorised by the Board of Directors for issuance and signed by Chairman and Managing Director on 23 June 2015.


A. MONETARY STATISTICS106 A1. Money Supply107 A2. Official Foreign Reserves108 A3. Exchange Rates109 A4. Domestic Interest Rates

B. COMMERCIAL BANKS110 B1. Assets And Liabilities111 B2. Loans And Advances By

Industrial Classification112 B3. Types Of Loans And Advances To

Non-Bank Customers113 B4. Types Of Deposits Including

S$NCDS114 B5. Liquidity Position

C. FINANCE COMPANIES115 C1. Assets And Liabilities

D. MERCHANT BANKS116 D1. Consolidated Assets And Liabilities117 D2. Assets And Liabilities Of Domestic

Unit Operations

E. INSURANCE INDUSTRY118 E1. Assets And Premiums

F. NON-BANK FINANCIAL INSTITUTIONS119 F1. Central Provident Fund Board

G. DOMESTIC CAPITAL MARKET120 G1. Net Funds Raised In The Domestic

Capital Market

H. ASIAN DOLLAR MARKET121 H1. Assets And Liabilities122 H2. Maturity Transformation By Asian

Currency Units

STATISTICAL ANNEXES

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UN

ITS



GLOSSARY


GLOSSARY

AML/CFT Anti-Money Laundering and Countering the Financing of Terrorism

ASEAN Association of Southeast Asian Nations

ASEAN-4 ASEAN Indonesia, Malaysia, Thailand and the Philippines

ASEAN+3 ASEAN plus China, Japan and South Korea

CNH China Offshore Spot

CNY Chinese Yuan

COE Certificate of Entitlement

CPI Consumer Price Index

EUR Euro

FinTech Financial Technology

FY Financial Year

G20 Group of Twenty

G3 Group of Three

GBP British Pound

GDP Gross Domestic Product

IMF International Monetary Fund

INR Indian Rupee

IT Information Technology

JPY Japanese Yen

MOU Memorandum of Understanding

q-o-q Quarter-on-Quarter

RMB Renminbi

S$/SGD Singapore Dollar

SGX Singapore Exchange

THB Thai Baht

y-o-y Year-on-Year

US$/USD United States Dollar

Published by Monetary Authority of SingaporeDesigned and produced by: Oculus Design Pte Ltd

Copyright © Monetary Authority of Singapore 2015This annual report is copyright under the Monetary Authority of Singapore.No reproduction without permission. All rights reserved.

Monetary Authority of Singapore10 Shenton Way MAS Building Singapore 079117www.mas.gov.sg

C Monetary Authority of Singapore

10 Shenton WayMAS Building

Singapore 079117www.mas.gov.sg

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