The region remains heavily reliant on bank lending, and capital markets are not deep enough. •  According to McKinsey, bank loans were more than a third of Asian banking and capital markets, compared to just 10% in the US. •  Debt capital markets are particularly under-represented, contributing only 20–30% of financing in Asia, compared to 65% in the US and 55% in Europe. A “new normal” in global finance? How will the global financial landscape change in response to these three driving forces? It will be hard to say but let me hazard some guesses. First, if the reforms are well implemented, we should see a material reduction of risk in the financial sector and improved financial stability. I do not think we will see an end to financial crises as such, but financial systems should become more resilient. This, in and of itself, will enhance economic welfare substantially. Second, financial institutions will be forced to rationalise their business models and streamline their operations to better optimise capital, reduce compliance costs, and enhance efficiency. Third, global financial institutions will expand their Asian footprint. They will establish more Asia-focused teams and functions. Many of these firms will make a second home in Asia. But Asia is a diverse and non-homogenous market. Global financial institutions will hub in more than one location. The structure of global banks is likely to change significantly. Banks’ profits and return on equity will come under pressure. The risk-return profiles of virtually all banking products will be re-ordered.
•  Final details of the regulatory capital framework will be announced by June this year. Diverse ecosystem The second pillar: Singapore has a diverse financial ecosystem. The various parts of the financial sector not only serve important functions in their own right, but are mutually reinforcing. •  The World Economic Forum has ranked Singapore 2nd worldwide for financial market development – a testament to the depth and breadth of Singapore’s financial sector. A full-fledged financial centre Singapore provides a broad and integrated suite of financial services. We are an important regional funding centre. •  The Asian Dollar Market, with its total asset size of more than 1 trillion US dollars, has played a key role in serving the financing and treasury needs of individuals, corporates, and institutions in Singapore and the region. We are the premier asset management centre in Asia, acting as gateway to the world for Asian investors and for the world to tap Asian investments. •  Assets under management by Singapore-based managers have more than quadrupled over the last decade to reach 1 trillion US dollars in 2011. We are the leading insurance centre in Asia. •  Singapore plays host to about 190 insurance institutions meeting the protection needs of the economy and society across the region. •  The industry has built up expertise in complex and specialist risks – including marine, energy, aviation and credit and political risks. We have one of the most developed bond markets in Asia.