Tharman Shanmugaratnam: Singapore – a widely respected centre of Asian and global finance Keynote address by Mr Tharman Shanmugaratnam, Chairman of the Monetary Authority of Singapore, at the Association of Banks in Singapore (ABS) Annual Dinner, Singapore, 30 June 2015. *  *  *  Chairman and Council Members of the ABS, Ladies and gentlemen, 1. Thank you for inviting me to join you this evening. 2. We meet at a time of renewed uncertainty in global finance. Greece has imposed capital controls and declared a banking holiday to stem a full-blown financial crisis. 3. No one has been able to predict each step in the game of brinkmanship that we have seen over the last few weeks. But the underlying reality of a sharply deteriorating economy in Greece, and the prospect of bankrupt Government, has not been a surprise. It is too early to say if some form of Grexit becomes a reality, but it is a contingency that Eurozone governments and financial institutions have been preparing for. 4. The direct impact of a collapse of the Greek economy is not significant, even in the Eurozone. The ECB and the EU are also likely to take all steps necessary to safeguard the Eurozone financial system in the coming weeks. Markets have hence not shown great panic, with credit spreads widening only slightly in the Eurozone periphery. 5. But there are downside risks we should be mindful of.
18  J.-M. Grether, M. Olarreaga, “Preferential and non-preferential trade flows in World Trade”, WTO Staff Working Paper, September 1998. 19  M. Bacchetta and M. Jansen, “Adjusting to Trade Liberalization – the Role of Policy, Institutions” and WTO Disciplines, WTO Special studies No 7, April 2003. 20  Based on the data of the IMF, Word Economic Outlook Database 2005. 21  Based on the data from national accounts, source: ONZ. 22  E.g. B. O. Sascha et al., “Location choice and employment decisions: a comparison of German and Swedish multinationals”, CESifo Working Paper No. 1374. BIS Review 19/2006  5  indicates that differences in remuneration constitute a significant factor that leads to relocation of jobs in manufacturing to the countries in our region. Hence, the result of production fragmentation is the optimal use of the advantage of location of particular production stages and the reduction of the average cost. However, its side effect are additional costs related to linking of the particular stages into one via activities that have the nature of services (e.g. transportation, co-ordination and management). The phenomena inseparable from all those mentioned above are offshoring and outsourcing. Offshoring consists in relocation of jobs and production or orders from the country where the company is based abroad – usually to countries with lower employment costs 23 . Offshoring does not have to necessarily take place within a single enterprise. Outsourcing, on the other hand, consists in relocation of a part of services outside the company. OECD calculations have shown that ca.