Banks entered the crisis from a position of strength and have been a source of stability and support for individuals and businesses throughout the crisis. MAS’ concerns at the onset of the crisis that defaults among weaker corporates could strain banks’ profitability and capital positions have not materialised. The domestic systemically important banks have started the year with strong capital positions. In fact, their aggregate CET1 ratio has held firm, at 14.7% in the first quarter of 2021 compared to 14.4% prior to the onset of COVID-19. Although default rates have seen a slight uptick, the banking system’s non-performing loan ratio has remained largely stable at around 2.4% as at Q1 this year. MAS recognises however that problem loans can take time to surface. Borrowers on full or partial loan moratoriums may not show signs of financial stress, especially if they are also obtaining financial support from the government. As support measures taper off, banks will have greater clarity about the repayment ability of their borrowers. It is good that our banks have set aside provisions against potential bad debts. MAS is conducting additional stress tests to assess whether it is necessary to extend the current dividend restrictions on local banks and finance companies. CYBER RESILIENCE Cyber risk remains one of the top risks which MAS is tracking closely. The incidence, scale, and complexity of cyber-attacks continue to mount. Recent attacks on major organisations globally such as Colonial Pipeline, Microsoft and Accellion, are strong reminders that the fallout from a cyber attack can be far-reaching.
The past two years have shown that the work of central banks and industry in partnership, at a global level, is productive in developing and supporting best practices. As such, while both the FXWG and MPG have fulfilled their mandate to develop the Code, this spirit of central bank-industry partnership will be maintained, as will the Code itself, in the future by the newly formalized GFXC. The GFXC reflects a significant expansion of cross-border and public-private sector efforts. It is a forum that brings together central banks and market participants via the FXCs—currently representing sixteen regions—to encourage collaboration and communication on FX-related issues, to exchange views on trends and developments in the FX market, and to promote and maintain the FX Global Code. In addition, the work to develop the Code has led to the development of central bank-sponsored FXCs in new regions, some of which have already launched and others that are forthcoming. FXCs, including the one sponsored by the New York Fed, will play important roles both within their own region and in their global engagement via the GFXC. One of the key objectives of the GFXC is to keep abreast of the evolution of the market, and work to ensure that the Code’s principles remain relevant. One area of evolution is electronic trading. Before concluding, I want to spend some time discussing the GFXC’s request for feedback on 4/6  BIS central bankers' speeches  particular aspects related to the use of last look in electronic FX trading.