Most of the local banks also service small depositors. This will continue. However, over the longer term, the conflicting pressures on banks on the one hand to provide a public service, and on the other to earn competitive returns for shareholders, will persist and intensify. ABS has encouraged banks that engage in consumer banking to provide affordable basic banking services to lower income Singaporeans. MAS welcomes this, and hopes that these banks will find ways to meet this need. MAS will monitor the situation closely, together with ABS and the banks. When it becomes necessary, MAS will require all banks with significant retail operations in Singapore to provide basic banking accounts with defined minimum features to low income Singaporeans. Cross-border partnerships As the financial industry continues to change rapidly and the global banks grow even larger, consolidation among the local banks alone may not be sufficient. Apart from seeking growth and acquisitions abroad, the local banks may also seek out foreign partners. Strategic partners can bring expertise and market discipline to Singapore banks. MAS has encouraged the local banks to explore such strategic alliances and is prepared to approve significant stakes by foreign banks, provided three conditions are met:  4  BIS Review 61/2001  a. One, the foreign player must be more than a financial investor. It must become a strategic partner bringing specialised skills, new technologies, or business strategies to the bank. The outcome must be in the long term interests of the bank;  b.
Here is it very important that the forecasts central banks consider in making monetary policy decisions are explicit about assumptions for future asset price movements, the uncertainty that surrounds them, the sensitivity of the forecast to alternative assumptions, and the costs and consequences of alternative paths for monetary policy. Even in circumstances where asset prices may appear to have moved away from fundamentals, and it seems reasonable to consider the implications of some deceleration in the pace of future increase or some decline, central banks need to be very cautious about adjusting policy in anticipation of that event, much less directing policy at inducing it. The substantial uncertainty about the path of asset price movements going forward necessarily reduces the case for altering policy in advance of the move. Consider the case in which it seems prudent for the central bank to incorporate an assumption for a significant move in the rate of change in future asset prices into its forecasts for output and inflation. If the central bank’s assumption is that asset prices are likely to fall over the forecast horizon, perhaps in the wake of a sustained rise in those prices, then it might in turn forecast a softer path for aggregate demand. These changes in the outlook might imply a lower expected path for the target rate than would have been implied by a different assumed path for the behavior of asset prices.