Ravi Menon: Smart regulation and sustainable insurance growth Speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Insurance Institute of London, London, 12 May 2015. *  *  *  Mr Stephen Riley, President of the Insurance Institute of London Mr John Nelson, Chairman, Lloyd’s of London Ladies and gentlemen, good afternoon. I wish to thank John for inviting me to speak to you today. It is a privilege to address members of this esteemed Institute, and a pleasure to do so in a heritage building of such architectural and historic interest. I have been to this building before. And my first thought as Lloyd’s Building came into view, along with its plumbing, stairways and lift shafts, was transparency. So it is apt that in the same spirit of transparency, I should make a couple of disclosures: •  one, I am not an actuary or an accountant, and  •  two, I am not responsible for Solvency II. But John has kindly assured me that the musings of a central banker and regulator from the Far East counts towards fulfilling your continuing professional development requirements. So for my speech today, I will offer an overview of MAS’ roles as central bank and integrated supervisor, our approach to regulating and developing the financial sector, and prospects for the insurance industry in Asia.
Moreover, our new forecast, which as always takes account of today’s decision, shows that a further tightening of monetary policy cannot be ruled out in the coming quarters. However, the environment continues to be subject to a high degree of uncertainty. Let me now say a few words about the exchange rate. The Swiss franc has appreciated in trade-weighted terms by around 7% since the monetary policy assessment in June. This appreciation helps to tighten monetary conditions and dampen inflationary pressure. In order to set appropriate monetary conditions, we remain willing to be active in the foreign exchange market as necessary. If there were to be an excessive appreciation of the Swiss franc, we would purchase foreign currency. If the Swiss franc were to weaken, however, we would consider selling foreign currency. Period of negative interest rates comes to an end  With today’s decision, an extended period of a negative SNB policy rate comes to an end. Negative interest was introduced at the beginning of 2015 to counter upward pressure on the Swiss franc associated with the discontinuation of the minimum exchange rate. Over the past years, negative interest has helped to dampen the appreciation of the Swiss franc and to ensure price stability. At the same time, we were always aware that negative interest can have undesirable sideeffects and presents challenges for many economic agents. On the whole, however, negative interest has proved its worth.