Impact of Cyprus Banking Crisis on Singapore

Ms Mary Liew asked the Prime Minister whether Singapore is affected by the banking crisis in Cyprus and what are the financial and regulatory safeguards in place to protect our taxpayers and depositors.

Mr Lawrence Wong (for the Prime Minister): The direct impact of the banking crisis in Cyprus on Singapore is unlikely to be significant. Banks in Singapore have negligible exposure to Cyprus. In addition, as Cyprus accounts for only 0.2% of the Eurozone’s GDP, its direct impact on the global economy is minimal.

However, we must remain vigilant to risks of contagion from Cyprus or any of the other peripheral economies in the Eurozone, especially given the continued financial strains faced by these economies. Contagion risks combined with policy uncertainty can lead to renewed financial stresses in the broader Eurozone.

Financial institutions in Singapore are subject to high standards of regulation and supervision. Our financial system has thus far remained resilient despite the crisis in the Eurozone. Liquidity conditions are sound and funding markets are functioning well. MAS, however, continues to closely monitor developments in the external environment and any possible impact on Singapore's economy and financial system.