the financial system of singapore

8/10/2019 The Financial System of Singapore

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-BY GROUP 4


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The Republic of Singapore is the only sovereigncity-state in the world which is also an islandcountry.

It is one of the 5 founding members of ASEAN

It is 4th largest Financial Centre

Peoples Action Party (PAP) has been the rulingparty since 1959.


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SINGAPORE INDIA

Continent Asia Asia

Motto "Onward, Singapore" "Truth Alone Triumphs"

Language English Hindi

Currency Singapore Dollar Indian RupeeCapital city Singapore New Delhi

Government Type Republic Constitutional, Fedral and

Republic

GDP $315 Billion $4.76 Trillion

GDP per Capita $59,700 $3.900

GDP growth rat 1.3% 6.5%

Unemployment Rate 1.9% 8.5%

Inflation 4.6% 9.3%

Literacy Rate 93% 62.8%

Foreign Exchange Reserves $238 Billion $298 Billion

External Debt $23,620,000,000 $376,300,000,000Public Debt (% of GDP) 118% 50%

Domestic Credit to Private

Sector (% of GDP)

120.61% 51.49%

Domestic Credit Provided by

Banking Sector (% of GDP)

99.54% 76.59%


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Trade (2013-14) in US$ Billions

Exports

Imports

Trade surplus / (deficit)

Singapore 415 366 49

India 298.4 500.4 (202)


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As at 30 April 2012, there were 769 listed companies onSGX with a market capitalisation of SGD$861 billion

This makes SGX nearly twice as big as the second largest

stock exchange in ASEAN, i.e. The Malaysia

Primary competitor - Hong Kong whose market is fourtimes as big as Singapore

Regulatory bodies - MSA Monetary Authority ofSingapore), Securities and Futures Act SFA)and FinancialAdvisers Act FAA)


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The outstanding volume of corporate debt increased

year-on-year by 9%. SGD debt issuances dipped

marginally by 4% y-o-y in 2011 while non-SGD debt

issuances expanded by 110%


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The Singapore Exchange (SGX) - a merger of the Stock Exchangeof Singapore (SES) and the Singapore International MonetaryExchange Limited (SIMEX)

About 40% of SGXs listings are foreign, spanning regions such as

Asia Pacific, particularly in South East Asia, and further afield inEurope and America

By FY 2013, the total market capitalisation of listed equities on SGXis USD $765 billion, which comprise more than 1% of the worlds

market capitalisation. This ranks SGX in 8th and 19th position inAsia Pacific and globally, respectively

0

500

1000

1500

Singapore

(SGX)

India (BSE)

7651263

Market Cap USD bn)

Market Cap (USD bn)


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Money Market regulated by Monetary Authority of Singapore (MAS)

MAS does not control the monetary system by monitoring interest rates.Instead, it manages the Singapore dollar (SGD) exchange rate against a trade-weighted basket of currencies of Singapore's major trading partners and

competitors.

Singapore benchmark interest rate is 0.07% and has averaged 1.68% from1988-2014 while Indias current interest rate is 8%

Monetary policy in Singapore is reviewed on semi-annual basis (April and Oct)while in India it is done quarterly


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The primary objective of Singapores monetary policy is price

stability for

sustainable economic growth. Since 1981, Singapores

monetary policy has been centered on the exchange rate


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CurrencyIssuance

MAS maintainsa stock ofcurrency notesand coins and

issues to orredeems fromthe banks asper the demandfrom customers

Central ProvidentFund (CPF)

Singaporesmandatorydefinedcontribution

pension fundscheme

GovernmentFund Transfers

MAS providesbanking andfinancialservices to the

government

InterventionOperations

Theseoperations, mayincrease ordecrease the

amount ofSingaporedollars in thebanking systemand affect theliquidity levels inthe system

MAS does not target any level of interest rates; it aims merely to ensure

that there in enough liquidity in the system

Managing Liquidity Levels: Banks are required to maintain a MinimumCash Balance (MCB) of certain percentage of their lagged qualifyingliabilities on a two-week average basis (can be equated to CRR)


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Intraday Liquidity Facility

The facility is open from 9amto 5pm. It provides marketparticipants with liquidity forsettlement purposes andhelps to smooth out theirintraday funding needs

Standing Facility

A two-sided discount windowthat allows MEPS (MASElectronic Payment System)participants to depositSingapore dollar funds with orborrow Singapore dollarfunds against eligiblecollateral from MAS on anovernight basis


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Highly developed banking system providing services ranging from consumer

banking and asset management to foreign exchange, investment bankingand specialized insurance services

Around 200 banks

Assets of domestic banks $2trillion(Dec 2013)

Emerging as one of the strongest in the world

FACTORS RESPONSIBLE FOR SUCCESS OF THE BANKING INDUSTRY

1.Liberalisation of the banking sector

2.Local banks strengthening their regional presence with M&A

3.Expansion of foreign banks

4.Development of innovative products & competitive pricing models

5.Strict Banking laws, Tax Friendly policies6.Sophisticated banking services

Top 3 Banks are :DBS, Overseas- Chinese Banking Corporation (OCBC)and United Overseas Bank (UOB)

Ranked as one of the most open economies for international trade and

investment and one of the most competitive countries in the world


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Comply with Banking CG Regulations Comply on a comply-or-disclose basis with the MASs Guidelines on Corporate

Governancefor Banks, Financial Holding Companies and Direct Insurers whichare incorporated in Singapore (CG Guidelines)

Banks incorporated in Singapore that are also listed on the Singapore Exchangemay, as listed companies, also comply, on a comply-or-disclose basis, with therequirements of the Code of Corporate Governance 2012, in respect of theirannual reports for financial years commencing after 1 November 2012

CAPITAL REQUIREMENTS

Adopted BASEL3 norms in 2013

From 1 Jan 2013:-

1. a minimum Common Equity Tier 1 (CET1) capital adequacy ratio (CAR) of4.5%

2. a minimum Tier 1 CAR of 6%

3. a minimum Total CAR of 10%


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Singapore serves as a base for insurance andreinsurance firms to write regional and international risks

Industry matured in terms of product offerings

Witnessed a growth of 28% in 2013

Insurers may conduct insurance activities in Singapore

as registered insurers, authorized reinsurers or foreigninsurers


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the financial system of singapore

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