Money laundering and terrorist financing is often cross-border in nature. Hence we have established effective channels to facilitate international co-operation and exchange of information. This will continue to be an important part of our overall AML/CFT regime. Enhancing Singapore’s reputation as a clean and trusted financial centre must be a collaborative effort by all stakeholders. It is neither realistic nor desirable to expect MAS to police every single transaction or activity in our financial markets. The responsibility lies with every FI to instil high standards of risk management and proper conduct at all levels. Boards and senior management in particular must send a clear signal that profits do not come before values and ethics. There can be no room for flexibility in ethical standards. Our financial centre must continue to be built on a bedrock of trust and integrity. The financial centre: dynamic and purposeful Next, building a financial centre that is dynamic and purposeful. The financial sector grew by 5.3% last year, compared to overall GDP growth of 2.0%. In fact, since the recovery from the global financial crisis, financial sector growth has consistently outpaced that of the overall economy. But this year, financial services and overall economy growth will be closer. Notwithstanding the slowdown in growth, the financial sector has continued to build on its strengths – strengthening infrastructure, deepening markets, and enhancing connectivity. Let me highlight some of the new initiatives we are embarking on. In asset management, we are building depth and breadth.
The economy is more or less at full employment, consumption has rebounded, and household income growth has recovered to near pre-crisis rates. The problem with the US recovery, at least from the perspective of Singapore and the region, is not its pace of growth but its composition. US GDP growth is not generating as much trade as previously, with persistent weaknesses in business investment, including in IT. This has implications for export growth in Asia and in Singapore. US consumption generates only around two-thirds the import demand that US investment does. So for Asia and Singapore, we need to see a recovery in US investment. BIS central bankers’ speeches  1  China’s growth should slow but we do not expect a “hard landing”. The official target of 6.5% is quite attainable on the back of fiscal stimulus and continued credit expansion. In fact, the risk is not of too low a growth rate but a growth rate that is achieved by adding to the underlying vulnerabilities in the Chinese economy: high and rising levels of corporate debt, industrial over-capacity and deteriorating asset quality in the banking system. Changes in the composition of China’s growth will continue to have an impact on Asia and Singapore. The rebalancing of demand away from investment and towards consumption has weighed on the region’s exports of commodities and capital goods. But over time, there are opportunities for countries which re-orientate the structure of their exports to tap on China’s burgeoning demand for consumer goods and services.