Singapore: Monetary Authority of Singapore


As the country’s central bank, the Monetary Authority of Singapore (MAS) fulfills the traditional roles of a central bank by setting and implementing monetary policy.  In my discussion with Jennie Ong from MAS, however, I learned that MAS fulfills multiple roles in the financial system in Singapore.  In addition to monetary policy, MAS is the chief regulator of the financial system as well as a promoter of the financial services industry in Singapore.

Central banking and securities regulations are distinctly different functions in the U.S. and are achieved by the Federal Reserve and the SEC (respectively).  In Singapore, those functions, as well as promotion and innovation initiatives, are all under the umbrella of MAS.  Considering this reach, it’s clear to see why MAS is such a powerful force Singapore.  I had a few people point out the MAS building and indicate that the rather modest looking building doesn’t do justice to the overwhelming power MAS wields in Singapore.

My discussion with Jennie Ong, Deputy Director in the Financial Markets Development Department, began with the question of “Why Singapore?”  Jennie was effective in the promotion mandate MAS fulfills as she explained why Singapore enjoys the success it does.  Singapore is consistently ranked as a top financial center of the world.  It has a skilled workforce, a great quality of life, and the highest education standards in Asia.  The World Bank ranked Singapore as the #1 place to do business.  They are extremely proud of their progress in Singapore and the continued growth in Singapore indicates that they’re doing things right.

Ryan Hessenthaler with Jennie Ong

Ryan Hessenthaler with Jennie Ong

Financial Services account for 12% of GDP in Singapore and 5% of total employment.  Because it’s an important industry, the government of Singapore is focused on supporting and growing the industry.  This support comes through MAS which has the authority and ability to direct capital toward the areas which are most promising or vital to continues success.  As part of the “Smart Nation” initiative, MAS is pumping over $250 million over 5 years into projects focused on financial technology and the financial innovations lab.  This lab is in incubator of sorts where new ideas and concepts are being tried and tested.  This focus on innovation, and significant support for it at the governmental level, are just some of the reasons Singapore continues to grow.

And growth is exactly what’s happening in Singapore.  Jennie noted that the industry grew by over 30% just last year.  Global managers are doing much more in Singapore and institutional money is flowing into Singapore.

The focus on innovation is certainly one reason for growth, but there are lots of innovative places in the world.  Another important factor contributing to Singapore’s growth is the regulatory environment.  From my limited view, I get the sense that regulations in Singapore are a bit like the porridge in the Three Bears children’s story – not too hot, not too cold… but just right.  That is, there isn’t so much red-tape and regulation that completely stifles growth and business formation; nor is there too little regulation where corruption and chaos reign.  Instead, there appears to be well-established and firmly enforced rules and regulations… and you either play by the rules or you don’t play at all.

MAS is eager to ensure a safe financial sector to promote business.  Like SGX, they are eager to maintain healthy markets so Singapore can continue to attract capital.  More than 70% of capital in Singapore comes from abroad, so ensuring a safe, robust environment for such capital is an important focus of MAS.

Regarding the more traditional role of a central bank, I found it interesting that MAS uses currency rather than interest rates to implement policies.  As Jennie explained, interest rates follow exchange rates, so they feel they have better control.  To read an explanation of Singapore’s use of currency in its monetary policy, please click here.


Special thanks to Brennan Staheli, Joshua Cooper, and the Lunt Capital team for their contributions to this report.