Banking liberalisation The second example of our measured liberalisation approach is the opening of our retail banking sector, with simultaneous steps to help strengthen local Singapore banks. Our starting position was different from most countries. Foreign banks (mostly British) dominated the Singapore banking system when we gained independence. For three decades, the Government has protected the local banks, especially in the retail business, to enable them to expand their market share. We believed that strong and well-managed local banks, with a significant share of the home market, were critical to the resilience and stability of our financial system. We wanted to be sure that in a crisis, we could count on major institutions whose long term interests were aligned with the Singapore economy. We still hold this view. Like banks in other Asian countries, most of our local banks started as family banks, and are still run by their controlling shareholders. But strict supervision enabled them to grow into sound, wellcapitalised institutions, free of the problems of improper and imprudent lending to related companies. By Asian standards, the local banks were exceptionally well run. But compared to the best international banks, they lagged in many areas: size, technology, expertise, range and quality of service, and shareholders’ returns. We could not afford to let Singapore banks fall behind, or deprive the rest of our economy of worldclass financial services. In any case, because of globalisation and cross-border competition, a protectionist policy was becoming less and less tenable.
Moving forward, a better policy calibration is needed in order to weather these structural changes and banks should put in place arrangements for restructuring the debt of those firms that can be saved, while facilitating the orderly exit of those firms that are unlikely to succeed in the postpandemic economy. The uncertainties remain extremely high and further delays in the economic recovery will put more pressure on the public resources and complicate the trade-offs in their reallocation. However, I would like to end on a more optimistic note and say that we do hope for a swift 1/2  BIS central bankers' speeches  recovery as we continue to do our part in curbing the effects of the pandemic. With these in mind, I wish Ms Laura Valderrama success with her presentation on the results of the analysis of corporate vulnerabilities and a very fruitful discussion to all the panelists and guests. Mr Kammer you have the floor. 2/2  BIS central bankers' speeches