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Singapore’s banking liberalisation moves on to the next chapter with digital banks
Tharman Shanmugaratnam, senior minister and chairman of the Monetary Authority of Singapore, reveals the next steps inliberalising Singapore’s banking system and shares his thoughts about the ongoing digital revolution in finance during the Association of Banks in Singapore’s annual dinner, held on 28 June 2019.

July 02, 2019 | Tharman Shanmugaratnam

It will be a new phase in our banking system. But the spirit of what we intend to do, and the calibrated way in which we will move forward, is similar to the approach we have taken over the last 20 years, from the time we began liberalising the industry.

Monetary Authority of Singapore (MAS) embarked in 1999 on a major programme to open up and liberalise Singapore’s financial sector across the board, in banking, our securities markets, and in insurance. We did so to ensure we remained a competitive and growing centre for finance in Asia and globally. But enhanced competition was also a way to spur our local banks themselves to upgrade and innovate so that they remained strong anchors in our banking system, and to expand into markets abroad.

We took a calculated risk. The risk was not trivial, as we began opening up in the midst of the Asian financial crisis. The changes in banking in particular had to be paced out, to ensure that confidence in our local banks and the system as a whole was not shaken, and to give the banks time to regear and to grow new capabilities.

The liberalisation of the banking industry to date has achieved its key objectives. Singapore is one of the leading financial centres in Asia, and plays an enhanced role in financing the region’s growth. We have also retained a core of strong and increasingly innovative local banks, as anchors of the banking system. Critically, trust in our local banks and the MAS as regulator remains high. We have avoided the sharp decline in trust seen in many financial centres.

MAS has consistently held the view that banking systems need strong anchor players, competitive and well-supervised, who can take the long view and have interests closely aligned with both the growth and stability of the system as a whole.

The experience of the global financial crisis and its aftermath vindicated our view. A common feature of jurisdictions with systemically important financial cent...

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Keywords: Digital Banks, Digital Bank Licenses, Liberalisation, Singapore Banking Industry