FINANCIAL SECTOR IN SINGAPORE (Supervision with a lighter touch)

The following Question stood in the name of Mr Zainul Abidin Rasheed -

Mr Zainul Abidin Rasheed: To ask the Minister for Finance, despite the recent regional currency and stock market turmoil and calls from certain sectors for greater regulation on speculative activities, if he will elaborate on the reasons for the need for Singapore to call for the supervision of the financial sector with a lighter touch.

Mr Bernard Chen (West Coast): Question No. 13, Sir.

Dr Richard Hu Tsu Tau: Mr Speaker, Sir, the calls from certain quarters for more regulation of speculative activities relate to the recent volatile movements in foreign exchange and stock markets which have depressed the value of currencies and share prices in the region. The belief is that some mechanism should be introduced to control speculative foreign exchange activities.

These calls are unrelated to the concept of regulating Singapore's financial sector with a "lighter touch", as outlined by DPM BG Lee in his speech to SESDAQ on 4th November 1997. Regulating with a "lighter touch" does not mean the lowering of supervisory standards. The maintenance of high supervisory standards will remain a cornerstone of Singapore's development as a financial centre. It means modifying the style and balance of regulation and supervision. The proposal is to set clearer rules to encourage the private sector to play a greater role and to allow more innovation, but to accompany this with more comprehensive supervision to ensure compliance. The reason for this change in approach is the need to respond to rapidly changing banking technology and international competition. This is a strategic shift in approach which we must do independent of the short-term economic ups and downs.