It is about growing the Singaporean talent base as well as being a magnet for the world’s talents. It is about a vibrant entrepreneurial and innovation base, characterised by a lot of start-ups, a lot of experimentation, and a lot of R&D. A key aspect of dynamism is also high rates of churn in the labour and capital resources in our firms: There needs to be continuous flux and reallocation of resources in response to changing economic and market conditions. Both capital and labour need to be nimble and highly adaptive. The structure of the Singapore economy is well suited for sustaining our dynamism. Singapore’s strong advanced manufacturing and related trade and logistics activities are internationally competitive. In modern services, comprising financial, professional services, and info- communications technology, we enjoy an international hub status. Together, these sectors make up some 40% of our economy. If our domestic services can be further professionalised – job by job, each worker possessing deep skills and delivering a high quality of service, we will be a dynamic economy. Finally, dynamism must be about our people. We must remain an open society. 16 / 17  BIS central bankers' speeches  Not just in being open to foreign trade, investment, and talent, but being deeply connected to the rest of the world. Not just attracting foreign talent to Singapore but Singaporeans venturing abroad as our companies and industries internationalise.
Stricter capital requirements could influence monetary policy in a number of ways. First, a tightening of capital requirements would counteract the build-up of financial imbalances. Second, the countercyclical buffer could cushion the adverse effects of a future downturn on bank lending. Third, higher levels of equity capital will increase banks’ resilience and thereby reduce the likelihood of financial crises. The example also sheds light on conditions that have been important to the conduct of monetary policy in recent years. Low interest rates internationally are an important explanation for the low key policy rate in Norway. At the same time, banks have increased their lending margins in anticipation of higher capital requirements. Let me emphasise that capital adequacy requirements are only one of several factors influencing bank lending margins and rates. And bank lending rates are only one of many factors that are given weight when the key policy rate is set. The relationship between capital requirements and the key policy rate is not straightforward. The example above shows that it may be appropriate to lower the key policy rate while at the same time tightening capital requirements for banks. But situations could also arise where it would be appropriate to raise the key policy rate while at the same time tightening capital requirements for banks. This could be the case if the economy was booming, with prospects for high inflation and a concurrent risk of a build-up of financial imbalances.