The macroeconomic landscape for MAS has become more complex, with external and domestic forces interacting in unprecedented ways. •  Externally, Singapore is facing a wall of money and rock-bottom interest rates that could potentially set off asset market bubbles that could in turn have knock-on effects on consumer price stability and financial stability. •  Domestically, we are facing a demographic cliff that will tighten labour markets and could potentially set off a wage-price spiral that could unhinge inflation expectations. Macro policies will be on heightened alert to ensure that economic stability and financial stability are safeguarded as Singapore navigates this new landscape. We are well placed to deal with the risks ahead. •  Our exchange rate-centred monetary policy remains fit for purpose and will continue to focus on keeping inflation contained. •  Our macroprudential policies will complement monetary policy and financial supervisory policies to secure sustainable asset prices and financial stability. 8  BIS central bankers’ speeches  •  Most of all, Singapore’s fundamentals remain sound. Fiscal prudence, financial discipline, minimising debt and living within our means, will provide us policy space and buffer to weather whatever comes ahead. This is an advantage most countries do not have. I wish you a successful and enlightening conference. Thank you. BIS central bankers’ speeches  9
To achieve this objective, we have made it mandatory for the conventional banks to establish a dedicated Islamic banking division within the bank, create and observe a minimum Islamic banking fund, opening separate clearing account with the Central Bank to facilitate effective separation in the payments system as well as to have a separate accounting disclosure. Having these policies and infrastructure in place, we have been able to operate the dual banking system in a structured and systematic manner. Ladies and Gentlemen, Although the regulations are in place, close oversight and updated statistical reporting, supported by close monitoring through the early warning system, are necessary as measures to avoid banking failures. The global experience has shown that not all banking failures are due to economic and financial crises. The global experiences has shown that banking failures can be caused by the lack of good corporate governance in the banking institutions. Lack of transparency, lack of oversight, weak internal controls, lack of checks and balances, incompetent directors and abuse of power are among the elements of poor corporate governance. Hence, even the best regulations and supervision and the best financial safety nets cannot prevent such banking failures. The regulation of banking institutions therefore needs to be complemented and reinforced with good corporate governance.