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Coffeeshop Chit Chat - MAS tackled financial crisis well woh...</TD><TD id=msgunetc noWrap align=right> </TD></TR></TBODY></TABLE><TABLE class=msgtable cellSpacing=0 cellPadding=0 width="96%"><TBODY><TR><TD class=msg vAlign=top><TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"> </TD><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead vAlign=top><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>kojakbt_89 <NOBR></NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>10:48 am </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> (1 of 3) </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>31483.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt><!-- story content : start -->
Apr 10, 2010
How MAS tackled global meltdown
Key was operating on multiple fronts in whole-of-govt response
<!-- by line -->By Nur Dianah Suhaimi
http://www.straitstimes.com/PrimeNews/Story/STIStory_512761.html
SINGAPORE was not spared the effects of the global financial meltdown that began in 2008, but the Monetary Authority of Singapore (MAS) was able to manage developments and keep the situation here stable because it operated on multiple fronts.
Recalling those difficult days in an interview on Thursday, MAS managing director Heng Swee Keat spoke of the challenges Singapore faced at the time and how the central bank here handled the crisis.
When investment bank Lehman Brothers collapsed and concerns arose over the American Insurance Group (AIG) in the United States, the result was 'a period of huge uncertainty', Mr Heng said.
'We had to try and understand what the changes were about, how big an impact they were going to make. And then we had to be steadfast in the way we made decisions,' he said.
'You have to be decisive, but you cannot be hasty because of all that uncertainty.'
Despite the overwhelming nature of the recession, MAS moved incisively to focus on the areas it considered the most important:
First, maintain macroeconomic stability and the stability of the Singapore dollar.
'At that time, there was a lot of strain on the world's capital markets and so we took a number of actions to ensure we maintained calm in the markets,' said Mr Heng.
'So whether it was a swap line with the US Federal Reserve or the large amount of liquidity we made available to the banks, I think the actions had a calming effect on the markets.'
Second, ensure the stability of the banking system.
Although there were more than 150 foreign banks operating here, none of them suffered a 'major incident' during the crisis, Mr Heng noted.
He attributed this to MAS working very closely with regulators all over the world to get frequent updates so as to prepare for any eventuality.
Third, tackle the fallout from the AIG fiasco.
When AIG, the world's largest insurer, looked on the brink of collapse in September 2008, there was fear and uncertainty over the future of AIA, the group's subsidiary.
As a result, many jumpy AIA policyholders in Singapore wanted to surrender their life insurance policies.
'We had to come out with a statement to assure policyholders and show them the AIA operation in Singapore was fine,' recalled Mr Heng.
'If the policyholders had surrendered their policies prematurely, it might have been hard for them to get another policy at the same rate, especially if they were older people.'
Fourth, deal with the Lehman Minibond investors, many of whom were on the verge of losing their life savings.
As of February this year, some 80 per cent of the investors had recovered at least half of the money they had invested.
'It was essentially one crisis, but we had to operate on multiple fronts,' Mr Heng said of the period.
More importantly, he added, it was the whole-of-government response to the developments, coupled with efforts from businesses and workers, that pulled Singapore out of the crisis.
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Apr 10, 2010
How MAS tackled global meltdown
Key was operating on multiple fronts in whole-of-govt response
<!-- by line -->By Nur Dianah Suhaimi
http://www.straitstimes.com/PrimeNews/Story/STIStory_512761.html
SINGAPORE was not spared the effects of the global financial meltdown that began in 2008, but the Monetary Authority of Singapore (MAS) was able to manage developments and keep the situation here stable because it operated on multiple fronts.
Recalling those difficult days in an interview on Thursday, MAS managing director Heng Swee Keat spoke of the challenges Singapore faced at the time and how the central bank here handled the crisis.
When investment bank Lehman Brothers collapsed and concerns arose over the American Insurance Group (AIG) in the United States, the result was 'a period of huge uncertainty', Mr Heng said.
'We had to try and understand what the changes were about, how big an impact they were going to make. And then we had to be steadfast in the way we made decisions,' he said.
'You have to be decisive, but you cannot be hasty because of all that uncertainty.'
Despite the overwhelming nature of the recession, MAS moved incisively to focus on the areas it considered the most important:
First, maintain macroeconomic stability and the stability of the Singapore dollar.
'At that time, there was a lot of strain on the world's capital markets and so we took a number of actions to ensure we maintained calm in the markets,' said Mr Heng.
'So whether it was a swap line with the US Federal Reserve or the large amount of liquidity we made available to the banks, I think the actions had a calming effect on the markets.'
Second, ensure the stability of the banking system.
Although there were more than 150 foreign banks operating here, none of them suffered a 'major incident' during the crisis, Mr Heng noted.
He attributed this to MAS working very closely with regulators all over the world to get frequent updates so as to prepare for any eventuality.
Third, tackle the fallout from the AIG fiasco.
When AIG, the world's largest insurer, looked on the brink of collapse in September 2008, there was fear and uncertainty over the future of AIA, the group's subsidiary.
As a result, many jumpy AIA policyholders in Singapore wanted to surrender their life insurance policies.
'We had to come out with a statement to assure policyholders and show them the AIA operation in Singapore was fine,' recalled Mr Heng.
'If the policyholders had surrendered their policies prematurely, it might have been hard for them to get another policy at the same rate, especially if they were older people.'
Fourth, deal with the Lehman Minibond investors, many of whom were on the verge of losing their life savings.
As of February this year, some 80 per cent of the investors had recovered at least half of the money they had invested.
'It was essentially one crisis, but we had to operate on multiple fronts,' Mr Heng said of the period.
More importantly, he added, it was the whole-of-government response to the developments, coupled with efforts from businesses and workers, that pulled Singapore out of the crisis.
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