Including exchange rate effects, in Sing Dollar terms, MAS recorded a net loss of $ billion. In short, we made good investment gains, but when measured in Sing Dollars, these gains were more than offset by the strength of the currency. If we had reported our P/L in an international currency it would show a healthy profit. The effect of a strong Sing Dollar on our reserves should be seen in a broader context. First, the international purchasing power of our reserves is unaffected by strength of Sing Dollar. MAS’ foreign reserves serve two primary purposes in times of crisis: they finance our imports from the rest of the world, and safeguard the value of our currency. On both fronts, it is foreign currency value of the reserves that matters. Second, the strength of the Sing Dollar has safeguarded our domestic purchasing power. It has helped to moderate the increase in Singaporeans’ cost of living. For instance, while global oil prices rose by 20% in FY2010, domestic prices of oil-related items increased by only 10%. Or take another example of food prices. During FY2010, the rate of increase in food prices in Singapore was about half of that in our major trading partners, which includes both advanced and emerging economies. Last, I will elaborate on our efforts to maintain high regulatory standards. MAS is well-placed to meet higher global standards emerging from international regulatory reforms following the crisis.
Singapore’s regulatory regime already meets or exceeds international norms, and this has enabled us to weather the financial crisis relatively well. Following the crisis, international regulatory standards are being raised. We are well-placed to meet them. Let me start with banking. MAS announced last month we will require Singaporeincorporated banks to meet Basel III capital requirements earlier than the Basel Committee’s schedule, and at a higher standard. Market reaction to this announcement has been positive because Singapore-incorporated banks are well-capitalised and in a strong position to meet MAS’ revised requirements. These requirements will help keep our banking system strong and safeguard our financial stability. Likewise for liquidity. Singapore was one of earliest jurisdictions to require banks to maintain minimum liquidity levels. Over the years, this has evolved to a risk-based liquidity risk supervision framework. Singapore banks are therefore well positioned to meet the new Basel liquidity ratios. Effective regulation is not just about setting high standards. It is also about creating market conditions that enable financial institutions to meet the standards. Take for instance the higher liquidity requirements under Basel III. MAS has taken steps to increase the availability of liquid assets in the market and collaborate with other central banks to expand eligible collateral in the MAS Standing Facility. Let me elaborate. BIS central bankers’ speeches  3  We started issuing one-month MAS Bills in April this year. This has added about $ billion of high quality liquid assets for financial institutions. We have seen good interest in the Bills.