Lim Hng Kiang: Sharpening risk management capabilities Keynote address by Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman of the Monetary Authority of Singapore, at the 43rd Association of Banks in Singapore Annual Dinner, Singapore, 28 June 2016. *  *  *  Chairman and Council members of ABS, Ladies and Gentlemen, It is my pleasure to join you at the 43rd ABS Annual Dinner this evening. The global economy: slower for longer 2. Since I addressed the ABS in 2014, the global economy has continued to recover. But growth has been lacklustre and uneven. Risks remain, not least the prospect of political instability and the possibility of a rise in protectionist tendencies in the major economies. 3. In the near term, the unexpected results of the UK’s EU referendum or Brexit, would very likely continue to reverberate across financial markets around the world. It is a clear reminder of the risks that we face and how financial institutions and regulators must work together to ensure the continued resilience of our banking system and financial sector. •  MAS had been prepared for this possible outcome, and had taken precautionary measures, including keeping in close contact over the past weeks with banks in Singapore, foreign central banks and regulators. Our markets continue to function in an orderly manner and our financial system remains sound. 4. Beyond the immediate market turbulence, Brexit will also have wider economic implications for the region and Singapore.
While it is too early to make a firm call on the longer term consequences of the event, it will certainly weigh on both market confidence and on an already listless global recovery. •  Among the developed economies, the US has been most advanced in its recovery. This provided the impetus for the first interest rate hike in more than nine years in December 2015. However, the Federal Reserve has since held back from further rate increases amid a moderation of growth in the US and in many other parts of the world, as well as a rise in financial market volatility. •  Some central banks in Europe and Japan have adopted negative policy rates alongside other monetary easing measures to further support their economies, with mixed results. Central banks will have to be vigilant against undue financial market stresses arising from last Thursday’s referendum in the UK, and to be prepared for a period of heightened uncertainty that such an unprecedented event might entail. •  In Asia, China’s economic slowdown, softer commodities prices and weak demand in key export markets have been a drag on the region’s economies. Nonetheless, more resilient domestic demand conditions have continued to provide support to growth in many countries, including those in ASEAN. 5. The present low-growth, low-inflation environment, which in all likelihood will continue for some time, suggests that monetary policy settings in many parts of the world will remain accommodative, especially in advanced economies where inflation has been below target for a number of years.