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The Monetary Authority of Singapore (MAS) is the
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
and financial regulatory authority of
Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
. It administers the various statutes pertaining to money, banking, insurance, securities and the financial sector in general, as well as currency issuance. It was established in 1971 to act as the
bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...
er to and as a financial agent of the
Government of Singapore The Government of Singapore is defined by the Constitution of Singapore to mean the executive branch of the state, which is made up of the president and the Cabinet. Although the president acts in their personal discretion in the exercise ...
.


History

The MAS was founded in 1971 to oversee various monetary functions associated with banking and finance. Before its establishment, monetary functions were performed by government departments and agencies. The acronym for its name resembles ''mas'', the word for 'gold' in
Malay Malay may refer to: Languages * Malay language or Bahasa Melayu, a major Austronesian language spoken in Indonesia, Malaysia, Brunei and Singapore ** History of the Malay language, the Malay language from the 4th to the 14th century ** Indonesi ...
, Singapore's
national language A national language is a language (or language variant, e.g. dialect) that has some connection—de facto or de jure—with a nation. There is little consistency in the use of this term. One or more languages spoken as first languages in the te ...
– although the acronym is pronounced with each of its initial alphabets. As Singapore progressed, an increasingly complex banking and monetary environment required more dynamic and coherent monetary administration. Therefore, in 1970, the
Parliament of Singapore The Parliament of Singapore is the unicameral legislature of the Republic of Singapore, which governs the country alongside the president of Singapore. Largely based upon the Westminster system, the Parliament is made up of Members of Parliam ...
passed the Monetary Authority of Singapore Act leading to the formation of MAS on 1 January 1971. The act gives MAS the authority to regulate all elements of monetary policy, banking, and finance in Singapore. During the
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identif ...
, MAS brought forward its twice yearly meeting from some time in April to 30 March. The MAS decided to ease the
Singapore dollar The Singapore dollar (sign: S$; code: SGD) is the official currency of the Republic of Singapore. It is divided into 100 cents. It is normally abbreviated with the dollar sign $, or S$ to distinguish it from other dollar-denominated currencie ...
's appreciation rate to zero percent, as well as adjust the policy band downwards, the first such move since the
Global Financial Crisis Global means of or referring to a globe and may also refer to: Entertainment * ''Global'' (Paul van Dyk album), 2003 * ''Global'' (Bunji Garlin album), 2007 * ''Global'' (Humanoid album), 1989 * ''Global'' (Todd Rundgren album), 2015 * Bruno ...
. This makes it the first time the MAS had taken these two measures together. Unlike many central banks around the world, the MAS is not
independent Independent or Independents may refer to: Arts, entertainment, and media Artist groups * Independents (artist group), a group of modernist painters based in the New Hope, Pennsylvania, area of the United States during the early 1930s * Independ ...
from the
executive branch The Executive, also referred as the Executive branch or Executive power, is the term commonly used to describe that part of government which enforces the law, and has overall responsibility for the governance of a State (polity), state. In poli ...
of the Singaporean government; chairmen of the MAS were from the same political party of the Government. Previous chairmen were also either the incumbent or former Ministers of Finance, or were former
Prime Ministers A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister is no ...
or
Deputy Prime Ministers A deputy prime minister or vice prime minister is, in some countries, a government minister who can take the position of acting prime minister when the prime minister is temporarily absent. The position is often likened to that of a vice president ...
of Singapore.


List of chairmen


Policy

Since 1981, monetary policy in Singapore is mainly conducted through the management of the
exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
of the
Singapore dollar The Singapore dollar (sign: S$; code: SGD) is the official currency of the Republic of Singapore. It is divided into 100 cents. It is normally abbreviated with the dollar sign $, or S$ to distinguish it from other dollar-denominated currencie ...
, in order to promote price stability as a basis for sustainable economic growth. The exchange rate is an intermediate target of monetary policy in the context of the small and open Singapore economy (where gross
export An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...
s and
import An import is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. In international trade, the importation and exportation of goods are limited ...
s of goods and services are more than 300 percent of
GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...
and almost 40 cents of every Singapore dollar spent domestically is on imports), the exchange rate represents a significantly stronger influence on
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
than the
interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, th ...
. As a result, the nominal exchange rate, directly and indirectly, affects a wide range of prices in the Singapore economy, such as import and export prices, wages and rentals, consumer prices and output prices. MAS controls monetary policy through direct interventions in the
foreign exchange market The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspec ...
s and bears a stable and predictable relationship with the
price stability Price stability is a goal of monetary and fiscal policy aiming to support sustainable rates of economic activity. Policy is set to maintain a very low rate of inflation or deflation. For example, the European Central Bank (ECB) describes price s ...
as the final target of policy, over the medium-term. The Singapore dollar (SGD) is managed against a basket of currencies of Singapore's major trading partners and competitors; the various currencies are assigned weights in accordance with the importance of the country to Singapore's international trading relations (as shown below) and the composition of the basket is revised periodically to take into account any changes in trade patterns. MAS operates a
managed float regime Managed float regime is an international financial environment in which exchange rates fluctuate from day to day, but central banks attempt to influence their countries' exchange rates by buying and selling currencies to maintain a certain ran ...
for the Singapore dollar. The tradeweighted exchange rate, which is known as the 'Singapore dollar Nominal Effective Exchange Rate' (S$ NEER) is allowed to fluctuate within a policy band; the level and direction of which is announced semi-annually (typically every six months) to the market. The policy band provides a mechanism to accommodate short-term fluctuations in the foreign exchange markets and allows flexibility in managing the exchange rate. The exchange rate policy band is periodically reviewed by MAS to ensure that the policy band remains consistent with underlying fundamentals of the economy; the path of the exchange rate is continually assessed every 6 months in order to prevent a misalignment in the currency value. A Monetary Policy Statement (MPS) is released by MAS after each review, which provides information on the recent movements of the exchange rate and explaining the
forward guidance Forward guidance is a tool used by a central bank to exercise its power in monetary policy in order to influence, with their own forecasts, market expectations of future levels of interest rates. Communication about the likely future course of mon ...
of future exchange rate policy. MAS would also release an accompanying report, the Macroeconomic Review (MR), which provides detailed information on the assessment of
macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...
developments and trends in the Singapore economy; the MR is aimed to enhance market and public understanding of the monetary policy stance. As the MAS utilises the choice of the exchange rate as the intermediate target of monetary policy, this implies that MAS does not have any control over domestic interest rates (and
money supply In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include Circulation (curren ...
), due to the commonly accepted concept in
international economics International economics is concerned with the effects upon economic activity from international differences in productive resources and consumer preferences and the international institutions that affect them. It seeks to explain the patterns and ...
known as the policy trilemma. In the context of free capital movements, interest rates in Singapore are largely determined by foreign interest rates and investor expectations of the future movements in the Singapore dollar. Singapore domestic interest rates have typically been below U.S. Fed funds interest rates and reflect market expectations of a trend appreciation of the Singapore dollar over time. The exchange rate has emerged as an effective anti-inflation tool for the Singapore economy. In the twenty years since the exchange rate framework was in place, domestic inflation was relatively low, averaging 1.9% per annum from 1981 to 2010. As a result of the long record of low inflation, expectations of price stability in Singapore have become more entrenched over the years. The exchange rate system has also functioned to mitigate the adverse effects of short-term volatility on the real economy, while at the same time ensuring that the exchange rate remains aligned with economic conditions and fundamentals. The success of the exchange rate system is heavily dependent on the economic fundamentals of Singapore, such as prudent
fiscal policy In economics and political science, fiscal policy is the use of government revenue collection (taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variab ...
, flexible product and factor markets, sound
financial system A financial system is a system that allows the exchange of funds between financial market participants such as lenders, investors, and borrowers. Financial systems operate at national and global levels. Financial institutions consist of complex, ...
, and robust domestic
corporate sector In economics, the business sector or corporate sector - sometimes popularly called simply "business" - is "the part of the economy made up by companies". It is a subset of the domestic economy, excluding the economic activities of general gover ...
.


Debt

Singapore's debts are under the responsibility of MAS. As of 2022, Singapore's government debt exceeds the country's GDP at about 150%. However, these are not net debts, but gross external debts, which can be traced to the debt liabilities in Singapore's banking sector – a reflection of the country's stature as a major global financial hub. In essence, Singapore borrows to invest, not to spend. Therefore, unlike other countries, Singapore is a net creditor with no debt to anyone, and has a net debt-to-GDP ratio of 0%, maintained for almost three decades since 1995. Accordingly, Singapore is the only country in Asia with a AAA sovereign credit rating from all major rating agencies. For multiple years, Singapore emerged as the top country in the world with the least-risky credit rating under the Euromoney Country Risk (ECR) rankings, being one of the safest investment destinations. The country was also ranked as the freest economy in the world on the ''
Index of Economic Freedom The ''Index of Economic Freedom'' is an annual index and ranking created in 1995 by The Heritage Foundation and ''The Wall Street Journal'' to measure the degree of economic freedom in the world's nations. The creators of the index claim to tak ...
'' rankings.


Major Trading Partners of Singapore


Issuing banknotes and coins

Following its merger with the Board of Commissioners of Currency on 1 October 2002, the MAS assumed the function of currency issuance. MAS has the exclusive right to issue banknotes and coins in the Republic of Singapore. Their dimensions, designs and denominations are determined by the Monetary Policy Committee with Government approval. The banknotes and coins thus issued have the status of legal tender within the country for all transactions, both public and private, without limitation. In December 2020, MAS approved digital bank licenses for 4 tech giants, Grab- Singtel consortium,
Ant Group Ant Group ()'','' formerly known as Ant Financial, is an affiliate company of the Chinese conglomerate Alibaba Group. The group owns the world's largest mobile (digital) payment platform Alipay, which serves over 1.3 billion users and 80 million ...
, Sea Group, and Greenland Financial consortium. Grab-Singtel and Sea Group were awarded digital full banking licenses, while Ant Group and Greenland Financial were awarded digital wholesale banking licenses. In May 2021, the ability to transfer money between Singapore's PayNow and Thailand's PromptPay was announced.


Strategic initiatives


Application Programming Interface Exchange

The Application Programming Interface Exchange (APIX), a global fintech marketplace and regulatory sandbox was launched by the ASEAN Financial Innovation Network (AFIN), a non-profit organization established by the Monetary Authority of Singapore, the ASEAN Bankers Association (ABA) and
International Finance Corporation The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset-management services to encourage private-sector development in less developed countries. The IFC is a member of ...
(IFC), a member of the
World Bank Group The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Grou ...
in 2018.


Asian Institute of Digital Finance

The Asian Institute of Digital Finance (AIDF) is a research institute to enhance education, research and entrepreneurship in digital finance. AIDF is a collaboration between the Monetary Authority of Singapore, the National Research Foundation and the
National University of Singapore The National University of Singapore (NUS) is a national public research university in Singapore. Founded in 1905 as the Straits Settlements and Federated Malay States Government Medical School, NUS is the oldest autonomous university in the c ...
(NUS) and was established in 2021.


Singapore FinTech Festival

MAS organises Singapore FinTech Festival (SFF) annually in partnership with The Association of Banks in Singapore and in collaboration with SingEx Holdings, to connect the various FinTech communities around the world to interact with each other.


See also

* Securities commission


References


External links


Monetary Authority of Singapore
{{Authority control
Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
Statutory boards of the Singapore Government 1971 establishments in Singapore Government agencies established in 1971 Singaporean companies established in 1971 Banks established in 1971 Regulation in Singapore Financial regulatory authorities of Singapore