They must decide whether the new species of players are fish or fowl, in order to regulate them appropriately. In the borderless internet world, cross-border provision of services will be harder to police and regulate. Supervisors will have to cooperate much more closely, sharing information and coordinating responsibilities. WTO Trade liberalisation at the WTO, particularly liberalisation of trade in services, will gradually open up financial markets. This will increase competition in our domestic market, but it will also give us better access to foreign markets, and protect our rights in case of disputes. On balance Singapore will benefit, and so should our institutions, provided they prepare themselves. The General Agreement on Trades in Services (GATS) under WTO is already exerting an important effect, giving us meaningful protection. For example, it was a decisive factor in our favour in the CLOB dispute. 3  BIS Review 30/2000  We finally settled CLOB on acceptable terms without actually going to the WTO. But our rights at the WTO were a major factor which helped bring about this outcome. This measure of protection afforded by WTO’s multilateral framework gives us additional strategic reason to pursue the liberalisation of financial markets, ours as well as other countries’. Free trade agreements But we need a fall-back position in case WTO runs into trouble. After the fiasco of the Seattle Ministerial Meeting, such a scenario has become less unlikely. This is why we are pursuing free trade agreements (FTAs) with several potential partners.
BIS Review 30/2000  2  We have a chance to succeed as a hub, as Asian countries gradually open up protected national markets to foreign players. It will not be easy. It will take time for countries and governments to accept the logic of liberalisation. Too sudden a change, however, will provoke a nationalist reaction. This is happening in Thailand. The Nation reported that a group of nationalistic academics and businessmen, calling themselves the Nation Rescue Club, has attacked the government for selling off the country on the cheap. Its spokesman, a university professor, called on the Thai government to publicise details of the sale of Radanasin Bank to UOB, and Nakornthon Bank to Standard Chartered Bank. The group accused the government of striking acquisition deals which allowed foreign banks to take on virtually no risk since any future losses would be borne by Thai taxpayers’ money. But over time, if the globalisation wave persists in the financial industry, countries will eventually decide that the cost of closing themselves off is too great. They may then change their position, just as over the last two decades they have done in manufacturing, opening up to reduce import barriers, and promote MNC investments and exports. Malaysia’s Governor of Bank Negara has said that Malaysia may open up its banking sector to greater foreign participation, though only after 10 years [BT 30 Mar]. So liberalisation will happen, although to varying degrees in different countries. The internet The internet is having a major impact on financial services.