(iii)  Third, our approach must be sensitive to the impact on industry. No new regulation is costless. MAS must weigh the cost of new regulations on institutions which have to comply with them, against the broader benefits that those regulations have for the economy and society. With these principles in mind, I will now outline MAS’ approach to the issues I mentioned earlier. I will first touch on what Basel III will mean for Singapore’s capital adequacy requirements. After which, I will share MAS’ views on the current debate on universal banking. Capital requirements for locally-incorporated banks MAS has reviewed its bank capital adequacy rules. We will require Singapore-incorporated banks to meet Basel III earlier and at a higher standard. Singapore-incorporated banks will be required to meet the Basel III minimum standards by 1 January 2013, ahead of the Basel Committee’s January 2015 timeline. Singapore banks are well-capitalised and are in a good position to adopt Basel III sooner than 2015. Moreover, the long phase-in period provided by the Basel Committee was to ensure that the new requirements did not stall the economic recovery in countries that were at the centre of the crisis. Singapore’s situation is different: the recovery has been robust and the economy is well above pre-crisis levels. MAS will increase the minimum levels of common equity that locally-incorporated banks will be required to hold. The experience of other countries in the recent crisis shows that common equity is the most effective capital instrument to absorb losses and write-downs.
In these two days, discussions will focus on monetary policy, financial stability, economic modelling and forecasting, risk assessment and management, which are all traditional instruments in the central bank toolkit and need to be improved constantly. It is very important to note that, in addition to these traditional topics, the workshop will discuss research in new and important areas such as: digitalization of financial services, structural reforms, healthcare and its implication for central bank objectives and national welfare. Technological developments disrupting traditional labour, financial products and markets, and demographic developments may impose some of the most important challenges to our societies and institutions. Therefore, it is important to study and adequately understand these phenomena. In addition, we are glad and eager to discuss research findings from a number of authors who come from academia, central banks and other research institutions. The ideas and methodologies that are embedded in their research will introduce our researchers and economists to new ideas, will help them extend their research agenda, and will reveal potential opportunities of cooperation in the future. I believe that research in these and other innovative areas, like green finance, will develop further and become traditional topics in central banks’ research agenda. For this reason, I challenge our researchers to consider these trends in their future research agenda. Continuous enhancement of research topics and methodologies is a must for a central bank.