MONETARY AUTHORITY OF SINGAPORE (Change of management structure)

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MONETARY AUTHORITY OF SINGAPORE:

(Change of management structure): 11.

Mr Steve Chia Kiah Hong asked the Deputy Prime Minister and Minister for Finance if he will adopt the recommendation of the International Monetary Fund and World Bank to change the management structure of the Monetary Authority of Singapore, in specific, that of its chairman from holding multiple roles that can give rise to potential conflicts of interest.

Mr Lim Hng Kiang (for the Deputy Prime Minister and Minister for Finance): Mr Speaker, Sir, ideally the Chairman of MAS should not hold multiple roles. But there are practical constraints in Singapore that make it difficult to avoid completely senior elected officials holding multiple responsibilities.

There is no immediate need to change the status quo. First, the assessors from the IMF and the World Bank have

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acknowledged that there are legal and institutional safeguards against any potential conflicts of interest. For example, while the MAS Board sets the broad policy directions, it is the Managing Director and his management team who execute the day-to-day operations according to these policies. In addition, MAS' long tradition of sound licensing and supervisory decisions and its increasing transparency will continue to ensure that the MAS carries out its responsibilities in an independent manner.

Second, unlike in some countries where the central banks have been pressured to finance the fiscal deficit and so failed to maintain price stability, the Singapore Government maintains a prudent fiscal policy. There has never been any need for MAS to finance any Government deficit, nor is such a need likely to arise in future. MAS has full freedom to carry out its primary role of maintaining price stability. It has established credibility with the market, through its track record of running a monetary policy that has yielded low inflation and sustained economic growth over a long period.

Nevertheless, we will continue to review the MAS Act to further strengthen accountability and transparency.

Mr Steve Chia Kiah Hong (Non-Constituency Member): It means that the Minister actually agrees with the IMF on this matter. Two supplementary questions, Sir. First, is the Government so lacking in talent that it actually has to appoint the Deputy Prime Minister who is also the Finance Minister to be the central bank's Chairman? The second question is: what will happen to this post when the Deputy Prime Minister becomes the Prime Minister? Will he continue to be busy running the MAS as well?

Mr Lim Hng Kiang: The fact that the Minister for Finance is concurrently the

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Chairman of MAS is not a new arrangement. It has been so for many, many years. You may remember that when Dr Richard Hu was the Minister for Finance, he was also concurrently the Chairman. As for the second question, although I am deputising for DPM, I cannot answer that question.

Mr Steve Chia Kiah Hong: Sir, since the question is addressed to the Minister, and he cannot answer it, could I pose another Question subsequently for him to answer that?

Mr Lim Hng Kiang: He can pose a Question, and if DPM is around, he can answer it.