Tharman Shanmugaratnam
Singapore
“EDB conducts regular reviews to GIP to ensure its effectiveness in attracting only top-tier business leaders who are interested to drive the growth of their businesses and investments from Singapore.”
“MAS may vary the size of the additional capital requirement imposed on the bank and take other regulatory actions depending on the outcome of ongoing reviews. MAS requires all retail banks in Singapore to ensure that their mission critical systems supporting digital banking are resilient.”
“This question will be answered in the reply to Dr Tan Wu Meng's Parliamentary Question filed for tomorrow's Sitting. [Please refer to "Probe into Recent Disruptions of DBS' Digital Bank and Physical ATM Services and Preventive Measures Implemented", Official Report, 5 July 2023, Vol 95, Issue 107, Written Answers to Questions for Oral Ans…”
“Borrowing from the banks is one of the ways in which MAS carries out MMOs to soak up such excess liquidity. Like other central banks, MAS does this daily through an auction system, enabling MAS to withdraw liquidity through the Primary Dealers that submit the most competitive prices.”
“To mitigate consumer over-indebtedness, the Monetary Authority of Singapore (MAS) requires financial institutions (FIs) to implement a range of safeguards when extending mortgage loans and unsecured credit.”
“The Monetary Authority of Singapore imposes on external asset managers the same stringent regulatory standards for anti-money laundering and countering the financing of terrorism that it imposes on banks.”
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“The share of private residential property owners with outstanding mortgage loans increased from 54% to 62% between 2011 and 2013, before stabilising since. It was 62% in 2022. In comparison, those HDB flat owners with outstanding mortgage loans has decreased from 57% to 42% from 2011 to 2022. As reported in its Financial Stability Review published on 25 November, the Monetary Authority of Singapore's stress tests show that most households are financially resilient to income and interest rate shocks, although some households would be vulnerable under a more stressed economic environment. As interest rates continue to rise, all households should prudently manage their borrowings, especially when considering new mortgage loans.”
“These recent initiatives are significant. We should give them time to bear fruit and re-evaluate the situation before considering yet more new measures.”
“Initial Public Offering (IPO) volumes globally have fallen this year. The number of IPOs globally has fallen by 44%, and proceeds by 57%, in the first nine months of 2022 compared to the same period in 20211. SGX has seen nine listings to date, broadly similar to 2021 where we saw eight listings for the full year. But IPO proceeds from SGX listings fell, broadly in line with global trends. The Monetary Authority of Singapore (MAS) has shared in past sittings the initiatives that SGX and government agencies have implemented to increase the attractiveness of our equities market for local and international investors. Key initiatives include a $1.5 billion fund put together by the Government and Temasek to invest in the public listings of promising high-growth enterprises on SGX; a growth IPO fund by EDBi to support late-stage private enterprises to grow and prepare for an eventual public listing in Singapore; and an enhanced MAS grant scheme to defray the costs of a public listing on SGX, and to develop Singapore's equity research ecosystem. SGX has introduced new listing options to cater to new economy companies, such as the Special Purpose Acquisition Companies (SPAC) framework. Details can be found in previous Parliamentary replies2 [Please refer to: (a) "Volume of Trade Turnover on Singapore Exchange and Measures to Make Trades on Singapore Exchange More Attractive to Foreign Investors", Official Report, 1 November 2021, Vol 95, Issue 41; (b) "Local Companies that List Outside of Singapore", Official Report, 6 January 2020, Vol 94, Issue 115; and (c) "Upgrading Plans for Local Equities and Equity Derivatives Market", Official Report, 04 November 2019, Vol 94, Issue 113.] and MAS' media release on "Boosting Equity Financing for High-Growth Enterprises"3.”
“Singapore-incorporated banks' exposures to crypto assets are insignificant, contributing less than 0.05% of their total risk weighted assets. The Basel Committee on Banking Supervision (BCBS) is working to finalise a framework for the prudential treatment of banks' exposures to crypto assets. MAS contributes actively to this work, which seeks to ensure that banks maintain adequate capital and liquidity for such exposures. BCBS has issued two rounds of consultation thus far and will finalise the framework around the end of 2022. Pending the finalisation of the framework, MAS requires Singapore-incorporated banks to apply a 1,250% risk weight for exposures to riskier crypto assets, such as Bitcoin and Ether. This is the highest risk weight under BCBS' capital framework. Based on MAS' minimum total capital adequacy requirement of 10% for systemically important banks incorporated in Singapore, this means that Singapore-incorporated banks are required to hold $125 of capital against an exposure of $100 to a crypto asset like Bitcoin. For less risky crypto assets, such as tokenised corporate bonds that meet a set of conditions to ensure that they pose the same level of financial risks as traditional corporate bonds, the prudential treatment is similar to that applied to the traditional non-tokenised asset.”
“I thank the Members for the questions. Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Deputy Chairman of MAS, will address these in his reply at the 30 November 2022 Parliament Sitting. [Please refer to "Bankruptcy of Cryptocurrency Trading Platform FTX and Impact on Singapore's Financial Markets, Regulation of Such Asset Class and Strategies of Singapore's Investment Funds", Official Report, 30 November 2022, Vol 95, Issue 78, Oral Answers to Questions section.]”
“The Sustainable Stock Exchanges Initiative's Model Guidance on Climate Disclosure (SSE Model Guidance) provides a template to guide issuers on implementing the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD). The draft standards issued by the International Sustainability Standards Board (ISSB) build upon the TCFD recommendations and the Sustainability Accounting Standards Board (SASB) standards, among others. The ISSB standards are expected to form the global baseline for sustainability disclosures by corporates and financial institutions. ISSB is expected to issue its own guidance on how to report against its standards, which will likely supersede the SSE Model Guidance over time. Many jurisdictions expect to shift from existing standards and guidance, such as the TCFD recommendations and SSE Model Guidance, towards ISSB standards and guidance. As MAS has stated, it will set out a roadmap for mandatory disclosure requirements by financial institutions based on the ISSB standards.”
“A digital Singapore dollar is, essentially, money that can be digitally programmed to impose conditions under which the money can be spent. For example, merchants and issuers of digital Singapore dollars can specify the types of shops and validity period for their use prior to consumers receiving these money. When consumers make payment at these permitted shops, the digital Singapore dollars are transferred to the shop owners with the programmed conditions removed. The shop owners can then go on to use these digital Singapore dollars free of conditions, such as to pay their suppliers and so on. There are thus no restrictions on its fungibility and bearer value. MAS has collaborated with the industry to initiate a few trials to test the potential applications of such a digital Singapore dollar. At the recent Singapore FinTech Festival, trial participants used vouchers adapted from RedeemSG at participating food and beverage outlets, and the merchants received digital Singapore dollars with each voucher redeemed. Using digital Singapore dollars in this way offers some advantages over pure e-voucher systems: (a) merchants would not need to submit a separate claim to the voucher issuer and wait to be reimbursed; (b) consumers or merchants need not manually verify the validity of these vouchers, as the conditions for accepting them are digitally programmed; (c) merchants can easily support vouchers issued by multiple issuers through a common scheme, rather than having to onboard each issuer separately; and (d) MAS will continue these collaborations with industry participants. Future phases of work will study ways to improve user experience, as well as ensure security and privacy.”
“I thank the Members for the questions. Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Deputy Chairman of MAS, will address these in his reply at the 30 November 2022 Parliament Sitting. [Please refer to "Bankruptcy of Cryptocurrency Trading Platform FTX and Impact on Singapore's Financial Markets, Regulation of Such Asset Class and Strategies of Singapore's Investment Funds", Official Report, 30 November 2022, Vol 95, Issue 78, Oral Answers to Questions section.]”
“The average Loan-to-Value (LTV) ratio1 has moderated in recent years, with property values significantly exceeding their loan values. The available data shows that the average LTV ratio increased from 44% to a peak of 54% between 2011 and 2017, before steadily declining to 44% again as of Q2 2022. The share of mortgage loans for financing owner-occupied properties increased from 74% in 2008 to 79% in 2022. Correspondingly, the share of mortgages for financing investment properties fell from 26% to 21% over the same period. The low LTV ratio provides financial institutions (FIs) and existing borrowers with a good buffer against falling property valuations. However, with interest rates rising and increased uncertainty on global growth prospects, I urge households to exercise prudence and ensure that they are able to service their debts when taking on long-term financial commitments, including property purchases. To mitigate such risks, the Monetary Authority of Singapore (MAS) has tightened credit rules over the past year to curtail the loan amount that new borrowers can take out, including a lower Total Debt Servicing Ratio (TDSR) threshold.”
“Buy Now Pay Later (BNPL) service providers do not, as a market practice, open accounts for users under 18 years of age. As for BNPL users aged 18 to 21, the Monetary Authority of Singapore (MAS) does not have customer and default data. The existing features of BNPL schemes limit the extent of debt accumulation and the impact of a default for all users, including those below 21 years old. The BNPL Code launched by the industry earlier this month stipulates several measures to achieve this. Users will not be allowed more than $2,000 in outstanding payments unless an additional credit assessment is performed. They will not be allowed further transactions once they miss a payment. Late payment fees are capped, and outstanding amounts will not be subject to compound interest. BNPL service providers have committed to not initiate bankruptcy proceedings against users and consider extending assistance to users who face financial difficulties, by working out mutually acceptable repayment arrangements. MAS will monitor the industry's implementation of the safeguards set out in the BNPL Code and continue to work with the industry to mitigate the risk of consumer over-indebtedness.”
“Borrowers, generally, prefer near-term certainty in their monthly repayments while still having an avenue to refinance their loans later. MAS has received feedback from the industry indicating that customers had a generally tepid reception to previous launches of longer-term fixed-rate mortgages. In the United States, government-backed home mortgage companies, namely, Freddie Mac and Fannie Mae, were established to provide liquidity, stability and affordability in the mortgage market. They purchase mortgages from lenders to either hold or repackage, guarantee and sell them as mortgage-backed securities in the secondary market, thus making more capital available for lenders to provide new mortgages. Singapore’s FIs have sound capital positions and stable funding. Their mortgage lending approach is not constrained by a lack of available funding and they have been able to meet customers’ needs without any support from Government-backed entities.”
“The benefits of longer-term fixed-rate mortgage loans do not necessarily outweigh their costs and risks to borrowers. There are two pertinent considerations. First, mortgage loans with a longer period of fixed rates offer repayment stability but could come at higher costs over the lifespan of the loan. Financial Institutions (FIs) offering fixed-rate loans bear the risks of interest rate volatility and higher opportunity cost of funds when rates rise and will price them at higher interest rates than floating rate loans. This can already be observed in the market today. For example, the introductory rates for a two-year fixed rate mortgage loan offered by the local banks currently range from 3.5% to 3.75%, higher than those for floating rate mortgage loans of about 3% offered by the same banks. Second, borrowers may not have as much flexibility to refinance their loans when interest rates fall, as longer-term fixed-rate loans come with longer lock-in periods. Whether the longer-term fixed-rate loan benefits the borrower depends on the interest rate conditions when the loan is taken up. In a period of higher and more volatile interest rates, such as what we face currently, borrowers who enter into longer fixed-rate terms are at risk of being locked in at such higher rates, for a longer period. This means that should interest rates eventually decline, these borrowers may not have the option to refinance out of their loans or may have to incur substantial costs in doing so. Local banks, currently, offer a range of mortgages with rates that are fixed for up to five years. According to the banks that the Monetary Authority of Singapore (MAS) has engaged, these offerings reflect customer preferences.”
“Singapore retail investors would have minimal exposures to UK government securities, also known as gilts, or to UK pension-linked funds. Gilts are, as with most major government bonds, predominantly bought by institutional investors and financial institutions. UK pension-linked funds manage the pension monies of UK residents, and Singapore retail investors are unlikely to have invested directly in them. While Singapore retail investors may have indirect exposures to gilts through the global bond funds they invest in, these are relatively small. As of December 2021, such indirect exposures were estimated at about S$18 million. This is a miniscule 0.01% of the total invested by Singapore investors in retail investment funds.”
“Fourth, MAS is putting in place underlying enablers to support the growth of green and sustainable finance. These include (a) working with industry players to develop a taxonomy to help financial institutions in Singapore classify activities as environmentally-sustainable, harmful or in transition, (b) working with SGX to strengthen the comparability and reliability of sustainability-related disclosures for listed companies, major financial institutions and retail ESG funds, and (c) using technology to enhance investors’ access to trusted and high-quality ESG data for decision-making.”
“Headwinds arising from the energy crisis and higher interest rates have, generally, slowed global capital market and financing activity. Despite a slowdown in global green, social, sustainability and sustainability-linked (GSSS) bond issuance in 1Q2022, volumes have started to rebound in 2Q. Moody’s expects a 24% increase in global GSSS bond volumes in 2H2022, compared to 1H2022. In Singapore, we continue to see strong interest and growth in green and sustainable financing. From 2017 to 2021, over S$65 billion of GSSS bonds and loans were issued here. Singapore-based financial institutions continue to see a strong demand for GSSS bonds and loans. PUB recently raised S$800 million through its inaugural green bond issuance. We have also seen issuances from corporates, such as Singtel and Ascott Residence Trust, this year. Our local banks, DBS, OCBC and UOB, have also committed to grow their sustainable finance portfolios. MAS has been focused on promoting the growth of green and transition finance. First, MAS’ Sustainable Bond Grant Scheme (SBGS) and Green and Sustainability-Linked Loan Grant Scheme (GSLS) have helped to defray the additional costs incurred by corporates when they conduct external reviews aligned with internationally-recognised sustainability principles. Second, the Government has announced plans to issue up to S$35 billion of green bonds by 2030 to fund public sector green infrastructure projects. This will help grow our green bond market and deepen market liquidity for private sector green bond issuers. Third, MAS will promote the scaling of blended finance to mitigate risk for investors and spur flows into marginally bankable but worthy transition projects in the region.”
“Based on latest available data, about 63% of owners of private residential properties had outstanding mortgage loans as of the second quarter of 2022. The average Loan-to-Value (LTV) ratio of outstanding mortgage loans on private residential properties extended by financial institutions was at 44.3% as of the second quarter of 2022. As of August 2022, approximately 75% of outstanding mortgage loans on private residential properties were for the financing of owner-occupied properties and the remaining 25% were for investment properties.”
“Based on latest available data, as of the second quarter of 2022, about 20% of loans extended for HDB flat purchases by financial institutions (FIs) were on floating rate packages that move in tandem with market interest rates. The remaining 80% were either on (i) rates linked to board rates or fixed deposit rates, which track market interest rates but with some lag, or (ii) fixed interest rates over the first few years of their loan. As of the second quarter of 2022, about 37% of loans extended for private residential property purchases by FIs were on floating rate packages while the remaining 63% were either on (i) rates linked to board rates or fixed deposit rates, which track market interest rates but with some lag, or (ii) fixed interest rates over the first few years of their loan.”
“The total amount of money reported lost by migrant workers to scams was S$4.5 million in 2019, S$10.4 million in 2020 and S$24.9 million in 2021. The top two scam types involving them were phishing scams and job scams. The Government is taking action on multiple fronts to disrupt scammers' operations, strengthen enforcement against perpetrators and increase public education. It has been stepping up public education and engagement efforts to raise awareness of scams among the migrant worker community. MOM regularly provides anti-scam advisories and resources to migrant workers in their native languages. For example, as part of the Settling-In-Programme, migrant workers are taught how to avoid falling prey to scams and to not share their personal information or bank account credentials with anyone. MOM has, on an ongoing basis since July 2022, been running a social media campaign on scam prevention targeted at migrant workers. This has also been disseminated to migrant workers through NGOs and community partners. The Singapore Police Force (SPF) works closely with MOM and NGOs to disseminate the latest scam modus operandi within the relevant anti-scam advisories and to conduct outreach events. The Monetary Authority of Singapore (MAS) is working with other Government agencies to design a framework for shared responsibility amongst relevant parties when a scam occurs and one which incentivises each party to be vigilant against scams. The framework will apply to customers of financial institutions1.”
“The digital banks have launched their operations in the recent months despite the challenges brought upon by COVID-19. The banks have started with a smaller product range to selected customer segments and will scale up, in tandem with their business and risk management capabilities. Consumers and businesses in Singapore are, generally, well-served by our banking system. The incumbent banks have extended their customer reach by building partnerships and marketplaces, improved customer experience and expanded their digital offerings. The digital banks will add diversity and provide impetus for the existing banks to continue strengthening their own offerings. The digital banks should be well-placed to leverage existing ecosystems to provide new features to customers and pilot innovations that may be tailored to specific segments of the population, such as gig workers or individuals without steady income. This should take time to materialise, as has been the case in other jurisdictions.”
“In addition to general e-payment consumer guides on the MoneySENSE website, the MAS webpage on SGQR contains safety practices for consumers. Consumers should check the merchant’s name on their payment app against the name displayed on the SGQR label after scanning the QR code to make sure that they are paying the intended merchant. The SGQR membership rules also require its merchant acquirers to educate merchants on how to verify payments received through the SGQR label and to protect the label against potential fraud. Under the "Seniors Go Digital" programme, less digitally savvy individuals, including seniors, are trained in basic digital skills, such as transacting online and making e-payments. Seniors are also taught about cyber risks and threats and how to keep themselves safe online. This is done through one-to-one lessons at SG Digital community hubs located in selected community clubs and public libraries around the island. MAS continues to work closely with the industry and other Government agencies to review and enhance the suite of anti-scam measures, including scams committed via Scan and Pay mode. Any persons found involved in scams and frauds will be dealt with firmly in accordance with the law. Consumers should remain vigilant to ensure they are making payments to the intended merchants.”
“There are now nearly 5.5 million bank accounts registered with PayNow. Of these, three million are linked to mobile phone numbers, two million linked to NRIC numbers, and half a million linked to Foreign Identification Numbers (FINs). Usage of PayNow, including payments to merchants and businesses, reached S$46 billion in 2021. SGQR is the primary means for Scan and Pay to merchants in Singapore. Launched by MAS and IMDA in 2018, it is the world’s first standard for a unified payment QR code, allowing multiple payment schemes to be combined into a single SGQR label. SGQR’s participating payment schemes include widely used schemes, such as PayNow, Dash, FavePay and GrabPay. PayNow is the top payment scheme in SGQR and is accepted in more than half of the total SGQR labels in use island-wide. The adoption of SGQR has helped to make e-payments safer for merchants who only need to maintain a single SGQR label and guard it against tampering. Currently, more than 210,000 merchants operating across various service industries, including retail stores in shopping malls and food stalls at hawker centres, offer SGQR as a means of payment acceptance. This accounts for over 90% of merchants in Singapore. The Singapore Police Force (SPF) has been monitoring scam cases where fake payment QR codes were generated to divert payments meant for legitimate merchants. There have also been cases where legitimate merchants were defrauded by persons who were meant to make Scan and Pay transactions but did not do so. Based on data provided by SPF, both scam types are not prevalent. From 2020 to the first half of 2022, there were a total of 20 cases reported. MAS has stepped up efforts to educate both consumers and merchants on using e-payments safely.”
“The banking and insurance industry associations have also established steering groups to strengthen culture and conduct and improve sales and advisory standards. MAS will continue to work closely with financial institutions, their board and senior management, as well as industry associations, to maintain trust in the financial sector.”
“Financial institutions and their representatives are required under the Financial Advisers Act and the Insurance Act to ensure proper conduct when selling investment and insurance products to customers. For example, (a) before representatives are allowed to conduct such activities, they must be assessed by their financial institutions to be fit and proper and must pass the relevant examinations in product knowledge; (b) when providing financial advice, a representative is required to make recommendations that suit their customers' needs and financial circumstances; and (c) they must also clearly communicate to their customers key information on product features, relevant fees and charges, as well as the associated risks. These include the risk of investment losses and the cost of surrendering an insurance policy early. Financial institutions are required to investigate complaints and report to MAS misconduct committed by their representatives. MAS will engage financial institutions to remediate any weaknesses observed in advisory and sales practices. MAS will also investigate and take firm enforcement actions against errant representatives. These include issuing prohibition orders to bar representatives who commit serious offences, such as mis-selling, from working in the financial industry for a specified period of time. Customers can seek recourse through their financial institutions and the Financial Industry Disputes Resolution Centre (FIDReC), an independent institution established by MAS. In sum, financial institutions have a duty to safeguard the interests of their customers. MAS has been working with the industry to promote fair dealing and ethical conduct.”
“MAS recently raised the medium-term interest rate floor to 4% for residential property loans under both the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR) frameworks, based on assessments of the likely path forward for market interest rates. The three-month Compounded Singapore Overnight Rate Average (SORA), which is a key reference for floating rate mortgage loan packages, has increased from near-zero levels in the last decade to about 2% as of early-October 2022. Interest rates for SORA-based mortgages, which include a spread, have increased, in tandem, to about 3%. The long-run historical average for mortgage rates was around 4% in the 1990s and 2000s, before the period of exceptionally low rates we saw between 2009 and 2021. Judging from market-based forward prices, the interest rates for SORA-based mortgages could rise further in 2023, before easing to levels that will still be significantly higher than the low rates seen in the last decade. The medium-term interest rate floor framework ensures that borrowers continue to borrow prudently as interest rates rise. In periods of low mortgage rates, financial institutions are required to assess borrowers' debt servicing ability at the higher medium-term interest floor rate. In periods when the medium-term interest rate floor is exceeded, financial institutions are required to compute the TDSR and MSR using the highest interest rate applicable over the property loan tenure. With global growth weakening and interest rates rising, we urge households to exercise caution and ensure that they are able to service their debts before making long-term financial commitments.”
“As at the second half of 2022, 42% of all households who live in Housing and development Board (HDB) homes have outstanding mortgage loans. Of these, 63% were granted by HDB and the remaining 37% by financial institutions (FIs).”
“In Singapore, as in other jurisdictions, not all activities related to digital payment token (DPT) – referred to as cryptocurrencies – are regulated. A company that provides a service which involves buying, selling or facilitating the exchange of DPTs would be regulated under the Payment Services Act 2019 (PS Act). The Monetary Authority of Singapore (MAS) would not have information on the number of parties interested in setting up cryptocurrency investment companies in Singapore unless they apply for a licence from MAS. MAS' regulation under the PS Act focuses on money laundering, terrorism financing risks and technology risks. It administers a rigorous licensing process to ensure that we admit DPT service providers with strong governance structures and robust controls to address these risks. Many applicants have been turned away. Where MAS has reason to suspect that an applicant is involved in illicit activities, MAS will, besides rejecting the application, refer the matter to the Police for investigation. MAS also conducts surveillance to identify unlicensed firms that illegally provide DPT services or solicit customers in Singapore. It will instruct these entities to stop offering services to Singapore residents and refer them to the Police for investigation. MAS may also place them on its Investor Alert List to warn the public that these entities are not supervised by MAS. MAS also works closely with the Police to combat cryptocurrency scams. MAS and the Police have issued public advisories alerting consumers to guard against fraudulent websites soliciting cryptocurrency investments. When dealing with cryptocurrency firms, consumers should check if the entities are licensed or have been granted an exemption to hold a licence by referring to MAS' website.”
“MAS will take appropriate supervisory actions against regulated entities that fall short of its standards.”
“Privacy coins1, privacy wallets2 or cryptocurrency mixers3 can be misused by criminals since they are all designed to hide the identity of persons behind cryptocurrency transactions. The Financial Action Taskforce (FATF) has issued guidance4 to the international community to treat transactions involving such anonymity features as highly risky. This means that regulated entities that undertake such transactions for their customers must take additional measures to mitigate the associated money laundering and terrorism financing (ML/TF) risks. Accordingly, the Monetary Authority of Singapore (MAS) requires digital payment token (DPT) service providers engaged in customer transactions involving such anonymity features to put in place stronger controls to address the higher risks they pose. In particular, they must assess the ML/TF risks posed by such tokens before dealing in them. MAS must be satisfied that they have taken adequate control measures to manage these risks5. MAS also requires DPT service providers to assess the purpose of their customers' use of privacy coins, privacy wallets or mixers and to undertake enhanced monitoring of their transactions6. Most licensed DPT service providers in Singapore do not offer privacy coins to their customers. There is, currently, no data on the use of privacy wallets and cryptocurrency mixers in Singapore, as both are essentially open-source and non-custodial protocols created by software developers and used to transact peer-to-peer. Nonetheless, MAS is closely monitoring the business activities of licensed DPT service providers. They are required to periodically report to MAS on DPTs they hold or transact in that they have assessed to be of higher risk.”
“According to statistics from the Singapore Police Force (SPF), there were 477 cases of banking-related phishing scams involving PayNow transactions in 2021, with a median loss of $3,400. In the first half of 2022, the cases stood at 133, with a median loss of $1,200. These unauthorised transactions were perpetrated by scammers who had deceived bank customers into giving them their digital banking credentials. The recovery rate for this category of unauthorised transactions, through PayNow specifically, is not available. The two rounds of anti-scam measures announced by the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) in January and June this year have strengthened safeguards against unauthorised banking transactions, including when such transactions are effected via PayNow. For instance, the default transaction limit set at $5,000 or lower and the default transaction notification threshold set at $100 or lower apply to PayNow transactions as well. Banks have also been adapting their anti-scam defences in response to new attack patterns, for instance, by temporarily lowering the PayNow limit to ward off attacks that may be directed at PayNow users. MAS continues to work closely with the industry to review and enhance the suite of anti-scam measures. Consumers need to stay vigilant and remember a few basic rules – one, do not provide your digital banking credentials to anyone under any circumstances; two, do not click on links purportedly sent by banks, as banks will not send you links in SMS or emails; three, use the banks' official mobile applications for your banking needs to minimise the risk of navigating to fraudulent websites.”
“For financial years 2020 to 2022, a total of 3,137 claims or around a thousand cases each year, were filed with and handled by the Financial Industry Disputes Resolution Centre Ltd (FIDReC). As of 23 September 2022, 2,922 or 93% of these claims had been resolved upon mediation or adjudication. The cases that remain unresolved are mainly more recent claims filed since March 2022. Based on FIDReC's data for its past three financial years1, about 89% of cases are resolved within six months and 97% within nine months.”
“MAS may also require the FinTech companies to put in place safeguards to contain risks arising from possible failure of the product or service. If the sandbox experiment is successful, the FinTech company can exit the regulatory sandbox and offer the new product or service as a fully regulated financial services activity. To do so, they must fully comply with the relevant legal and regulatory requirements and obtain the relevant licences. The MAS FinTech regulatory sandbox has, in fact, helped FinTech companies and MAS better understand both the benefits and risks of new products and innovations. It has also enabled the sandbox companies to validate the market potential for their new products and services. We have seen some companies in Singapore emerging from the sandbox to become fast-growing startups. As I mentioned, the agreement also provides for the involvement of additional jurisdictions, as part of the global regulatory sandbox arrangement. This will depend on the specific target markets of sandbox use cases, and whether the relevant jurisdiction has a regulatory sandbox regime to facilitate testing of these use cases.”
“The FinTech Cooperation Agreement signed between the Monetary Authority of Singapore (MAS) and India's International Financial Services Centres Authority (IFSCA) on 18 September 2022 aims to support experimentation and adoption of new financial products or services, and potentially enable cross-border testing with industry players in both jurisdictions. It does so by leveraging the regulatory sandboxes of both authorities. The agreement also provides for a broader global regulatory sandbox arrangement that caters to use cases which may involve other jurisdictions beyond Singapore and India. Such an arrangement, with India and any other jurisdiction in future, should enable faster time to market, particularly for products and solutions with cross-border applications. Under the agreement, a Singapore-based FinTech company interested in providing innovative financial services in India can reach out to MAS for referral to IFSCA. India-based FinTech companies can similarly benefit from this collaboration by reaching out to IFSCA for referral to MAS. The coordination between the two regulators allows the FinTech companies to apply for admission to the respective sandboxes, without the need to incorporate a business in the other jurisdiction before they are admitted to the sandbox. Similar to other applications to the local regulatory sandbox, MAS will assess any application under the agreement and perform the necessary due diligence on the FinTech company and its proposal. For successful applicants, MAS will work with the FinTech companies on agreed sandbox boundaries within which the companies can conduct market trials of their products or services.”
“Family offices can be either multi-family offices (MFOs) that manage third party assets of two or more families, or single family offices (SFOs) that manage assets belonging to only one family. MFOs are subject to licensing and regulation under the Securities and Futures Act (SFA), which provides safeguards to protect the interests of the different families served by the MFO. As SFOs manage the monies of a single family, they are not subject to licensing and regulation under the SFA. There are no plans to review the current licensing and regulatory approach for SFOs, which is also similar to that in other major jurisdictions. The Monetary Authority of Singapore (MAS) does not have comprehensive data on the areas that family offices in Singapore invest in. Investments typically span a globally diversified portfolio of assets including commodities, equities, fixed income, foreign exchange, insurance, structured products, private equity and venture capital. There is also increasing interest from SFOs in Environmental, Social and Governance (ESG) -related investments, private equity and venture capital investments which supports local and regional startups, and philanthropic and impact investments in Singapore and the region. Local investments by SFOs in Singapore could also increase as more SFOs set up here.1”
“The Government and MAS will continue to deploy fiscal, monetary and macroprudential measures as appropriate, to ease inflationary pressures and help cushion the impact of rising prices on Singaporeans.”
“The Government's approach to addressing inflation and its effects on households has been multi-pronged. Tighter monetary policy has dampened imported inflation, while targeted fiscal and credit support have assisted vulnerable Singaporeans to cope with the rise in the cost of living and attendant cash flow pressures. The Monetary Authority of Singapore (MAS) estimates that its monetary policy moves since October 2021 will restrain core inflation by an average of 1.2 percentage points each year over 2022 to 2023. In other words, had MAS not adjusted monetary policy, core inflation would be on average 30% higher. Given the sharp increase in global food and energy prices, it is not possible or judicious for monetary policy to completely offset their effects. Central banks in other countries will similarly not be able to completely offset this surge in global prices in the near term. The International Monetary Fund expects world inflation to reach 8.3% this year. This is where the Government's fiscal support, to cushion the impact of inflation on middle- and lower-income families, comes in. The Deputy Prime Minister and Minister for Finance had in July in Parliament highlighted the scale of the Government's support and addressed questions on the same. Besides rising prices, rising interest rates also impact Singaporeans. Domestic interest rates are likely to increase further in tandem with global interest rates. This will affect borrowing costs for home purchases. As Members know, MAS and the Housing and Development Board (HDB) have just taken steps to prevent excessive borrowing for home purchases. There is considerable uncertainty over global economic and financial developments. This affects countries all over the world, including Singapore.”
“At the same time, within the limited size of our local talent pool, we must groom and develop as many Singaporeans as possible so they have a strong chance to take on these senior leadership roles that we are creating and anchoring here. As many of our financial institutions serve the region using Singapore as a base, having deep knowledge of the region’s operating environment is critical for taking on senior leadership roles. MAS will provide funding support for financial institutions to develop more high-potential Singaporeans to grow their leadership capabilities through overseas postings and other development programmes. This will help them take on global and regional leadership roles. MAS is also stepping up its efforts to foster a strong network of Singaporean leaders in finance and enable a community of leaders to mentor our next generation leaders. We have seen some success. MAS estimates that more than 3,500 Singapore Citizens held senior roles in the financial sector in 2021, more than double compared to 2016. MAS will continue to work with financial institutions and tripartite partners to review and enhance the programme, upskill Singaporeans and better equip them to take on senior roles in finance and grow Singapore’s status as one of the world’s leading financial centres.”
“In the technology sphere, the Institute of Banking and Finance and MAS studied the impact of data analytics and automation on job roles in the financial sector. They then used this information to launch career conversion programmes that enable existing professionals to acquire skills for new job roles. More than 4,400 individuals in consumer banking, operations and insurance roles have been trained or are undergoing training and more than 2,100 individuals from this group have successfully taken on new job roles. The Technology in Finance Immersion Programme (TFIP) has helped 600 workers with no prior work experience in the areas offered under the programme, acquire skills to start a career in fields such as software engineering, data analytics and agile IT project management. Sustainability is an emerging field in the financial services sector, with high demand for talent and skills. In close consultation with industry, MAS has developed the Sustainable Finance Technical Skills and Competencies (TSCs), which define the standards of proficiency and knowledge that workers need to perform various job roles in sustainable finance. Training providers and financial institutions can use these TSCs to develop relevant training programmes. Finally, leadership development is an important area of focus for TLF. As Singapore grows in stature as a leading global financial centre, it is attracting more regional and global functions, and consequently leadership positions being based here. The recently announced ONE Pass programme is thus important, as it helps us attract high-quality global talent that can take on some of these leadership roles and help anchor these regional and global functions here, to create good jobs and value-added growth.”
“The Talent and Leaders in Finance (TLF) programme aims to help Singaporeans working in or looking to join the financial services sector take on deep specialist or senior leadership roles in the sector. It will also benefit the financial services sector in Singapore by adding to the skills, expertise and global networks of our local workforce. The programme will support our finance professionals at each stage in their careers. It will help them adapt to a changing financial services sector and take up opportunities in new growth areas. At the entry level, TLF will focus on ensuring our polytechnic and university students are well-equipped with the needed skills. The Monetary Authority of Singapore (MAS) is working with financial institutions and institutes of higher learning to structure internships with clearly defined goals to acquire skills and to update course curriculum so our students are equipped with in-demand skills. The programme will also co-fund job rotation schemes that provide training and mentorship for new entrants joining financial institutions. At the mid-career level, TLF will provide opportunities for finance professionals to reskill and upskill themselves, so as to help them respond to the fast-changing demands of their roles. These include subsidised course fees and career conversion programmes, and defraying expenses so as to encourage financial institutions to send their employees on overseas stints. Importantly, the programme will help develop Singaporean specialists in the two key growth areas of technology and sustainability. MAS is working closely with the industry to identify talent needs in these areas and develop relevant training programmes.”
“We have also begun to engage the banks on their transition plans to reduce their financing of emissions over time. Third, MAS has published a set of pieces highlighting emerging and good practices by financial institutions, including the approach towards sectors identified as posing higher environmental risks. The three local banks have established sector-specific policies to guide their risk assessment and lending decisions for clients in sectors with higher environmental risk. Beyond supervisory expectations, a number of financial institutions in Singapore have voluntarily pledged net zero goals as members of the Glasgow Financial Alliance for Net Zero (GFANZ) and have set or are working towards setting interim targets to achieve these goals. More recently, with MAS’ support, the GFANZ Asia-Pacific Network was set up in Singapore to spearhead Asia’s efforts to transition towards net zero in a credible and inclusive manner. MAS has been playing an active role as one of the leading regulators internationally who are seeking to promote finance as a critical enabler for global decarbonisation efforts. We will continue to engage financial institutions in building resilience to environmental risks and supporting an orderly transition towards a sustainable economy in Singapore and in the broader region.”
“Hard-to-abate sectors refer to sectors where the technology to significantly reduce carbon emissions is either not available or remains expensive. These include the heavy industry, aviation and maritime transport sectors. It is still necessary to finance these hard-to-abate sectors because they are important parts of the economy and alternative technologies to reduce emissions significantly have yet to be commercially viable or to achieve scale. The solution thus lies in helping firms in these sectors progressively reduce their carbon emissions and transit to cleaner energy over time. Financial institutions should thus provide firms in these hard-to-abate sectors transition financing to decarbonise, so long as these firms have credible transition plans that are aligned with the Paris Agreement goals. The Monetary Authority of Singapore (MAS) has taken several steps to promote responsible and credible transition financing by banks in Singapore. We have given guidance to banks that indiscriminate credit withdrawal from hard-to-abate sectors deemed to be of higher climate-related risk would adversely impact companies with credible transition plans. Instead, MAS expects banks to guide and support their clients’ transition plans with appropriate financing. We are working with the Association of Banks in Singapore to develop a template on the kinds of information banks could collect from their clients in order to guide their financing decisions. Second, MAS has issued guidelines on environmental risk management to all financial institutions, including banks, insurers and asset managers. MAS expects all financial institutions to assess and mitigate their exposures to environmental risks, including those stemming from the transition to net-zero.”
“Data on the total cryptocurrency holdings of the Singapore public are not available, as these involve transactions with both Singapore-based and overseas service providers. It is therefore not possible to determine the proportion of cryptocurrency holdings that the public has obtained through MAS-licensed digital payment token (DPT) service providers. MAS has continued to reiterate its warnings that retail investors should not trade in cryptocurrencies. The prices of cryptocurrencies fluctuate wildly and investors stand to lose all the monies they have put into cryptocurrencies.”
“This transparency helps consumers make informed decisions on whether and how much to borrow, and which product best suits their needs. We urge households to continue to exercise caution before taking up any new loans. Households should expect further interest rate increases over the next year at least, and be sure of their ability to service their loans before making long-term financial commitments. Borrowers facing difficulties repaying loans should also approach their lenders early to explore possible loan refinancing and repayment solutions.”
“MAS does not dictate interest rates and fees charged by financial institutions (FIs). These are commercial decisions that should be made by the FIs, as they bear the risks of lending. MAS has instead put in place safeguards and disclosure requirements, to enable consumers to make informed decisions and to encourage financial prudence. For unsecured credit facilities to be extended to individuals, MAS sets a minimum annual income requirement of $20,000, and also limits the amount that each FI can lend, depending on the borrower's annual income. An individual's total unsecured borrowings across FIs are capped at his annual income. To prevent excessive debt accumulation, a borrower's access to unsecured credit facilities with his FI will be suspended if the debt is past due for 60 days or more. For mortgages, MAS has put in place measures over the years that have enhanced households' resilience in servicing their loans, including through the current period of higher interest rates. These include the total debt servicing ratio (TDSR) framework and loan-to-value limits and loan tenure caps for mortgage borrowers. MAS also expects all FIs to clearly disclose fees and interest charges for their credit products. For example, in the case of credit cards, FIs are required to provide the total amount, including principal, interest, fees and charges, and the projected time that the customer will take to fully pay off the entire outstanding balance if a borrower has not paid the prior month's bill in full. MAS also require FIs offering mortgages to provide a fact sheet to borrowers stating key loan features and explaining how a borrower's monthly mortgage instalments would vary under different interest rate scenarios.”
“"Buy Now Pay Later", or BNPL, transactions amounted to $440 million last year. This is up from $114 million in 2020. However, BNPL transactions remain very small compared to other means of consumer payment. They were much less than 1% of total credit card and debit card payments last year. Under the Monetary Authority of Singapore's (MAS) guidance, the Singapore FinTech Association established a BNPL Working Group in March 2022 to develop a code of conduct (BNPL Code) for BNPL providers here. The Code is on track to be launched this year. The BNPL Code will limit the extent of debt accumulation by consumers. Measures under consideration include suspending users from making further BNPL purchases once a payment is overdue, not charging compounding interest on outstanding amounts, and requiring a user creditworthiness assessment before the user can exceed a stipulated credit cap with a BNPL provider. BNPL providers are also exploring sharing with one another information on customers’ outstanding amounts and delinquency status to facilitate better assessments of their customers’ creditworthiness. MAS will continue to monitor developments in the BNPL sector and work with the industry to address any risks to consumers.”
“That said, there will be a small segment of households who are more highly leveraged and will be more seriously affected by interest rate rises. Borrowers who have difficulty servicing their mortgages should approach their lenders early to explore possible loan refinancing and repayment solutions. For financially distressed HDB homeowners, MAS has worked with MND, HDB, MOM and financial institutions to establish standardised interventions when late repayments occur. These include potential loan restructuring solutions, early referrals to appropriate social service agencies and in certain limited cases, helping homeowners obtain alternative HDB accommodation where foreclosures are unavoidable. MAS urges everyone to exercise caution in any new borrowings. Households should assume that there will be further interest rate increases over the next year, at least, and be sure of their ability to service their loans before making additional commitments.”
“The household debt situation in Singapore by and large remains healthy, and should remain so in the rising interest rate environment that we face. The median Total Debt Servicing Ratio (TDSR), which measures the proportion of income spent on debt repayment, is 43% for new mortgages issued over the past year, well within the regulatory threshold of 55%. The proportion of non-performing mortgages in overall outstanding mortgages has also remained low and stable at less than 1%. The average loan-to-value ratio for outstanding mortgages extended by financial institutions is less than 50% as at Q1 2022, suggesting that households generally have significant net positive equity in their residential properties. Households' cash deposits have also grown faster than their liabilities, which improves their ability to meet immediate debt repayment obligations. The overall financial resilience of households to service their mortgages reflects the measures that the Monetary Authority of Singapore (MAS) has put in place over the years: (a) The interest rate used to calculate loan repayments under the TDSR is the higher of 3.5% or the prevailing market rate. This rate has built in a buffer against interest rate rises for borrowers who have taken out a mortgage in the past. (b) Loan-to-value limits and restrictions on loan tenure have also encouraged greater financial prudence among mortgage borrowers. Looking ahead, stress tests by MAS suggest that most households, including borrowers on floating rate packages, should be able to service their debt even under conservative scenarios of significant income losses and a full pass-through of sharp global interest rate hikes.”
“This question has been addressed by Question No 4 as published in the Circular for Written Answers on 1 August 2022. [Please refer to "Licences Awarded to Digital Payment Token Service Providers and Plans to Promote Singapore as Cryptocurrency Hub", Official Report, 1 August 2022, Vol 95, Issue 65, Written Answers to Questions section.]”
“Banks have progressively implemented the anti-scam measures announced in January and June. Specifically, banks have stopped sending clickable links in emails or SMS to retail customers and have been closely coordinating with the Singapore Police Force (SPF) Anti-Scam Centre to support rapid account freezing and fund recovery operations. According to statistics from SPF, the number of phishing scams involving banks has declined from a high of 839 during the OCBC phishing scams in December 2021 to 113 in May 2022. MAS will be publishing a consultation paper on equitable framework for sharing of losses arising from scams. However, pending implementation of the framework, MAS continues to expect banks to thoroughly investigate all scam cases and treat their customers fairly. Customers who had practised good cyber hygiene and were diligent in protecting their login information and one-time passwords from being divulged to third parties should not have to bear losses.”
“MAS is involved in international regulatory discussions, which are seeing growing consensus on the need to step up oversight of the industry for this purpose. Domestically, MAS is also enhancing our regulatory framework and will be consulting on the proposed measures in the next few months. From a developmental perspective, MAS' aim has been and remains to enable growth of an innovative and responsible digital asset ecosystem. Our main focus has been on innovations in distributed ledger technologies that can enhance efficiencies in key wholesale market activities such as trade finance, cross-border payments and the capital markets. MAS is working closely with the industry on these areas. MAS has been focused on this broader ecosystem aimed at real use cases, rather than cryptocurrencies, which formed a small part of the digital asset ecosystem. We have been very selective in licensing cryptocurrency players as DPT service providers. We will also continue to actively discourage retail participation in cryptocurrency trading, which as MAS has repeatedly warned is plainly hazardous. MAS will continue to adopt a risk-focused approach to regulating the digital asset ecosystem, with a view to facilitating innovation and anchoring high quality players with strong risk management and value propositions, while seeking to limit retail participation in the cryptocurrency market.”
“Mr Desmond Choo asked about digital payment token (DPT) service providers and the cryptocurrency market. Mr Saktiandi Supaat has raised a related PQ for the next Sitting. This response will cover the questions raised by both Mr Desmond Choo and Mr Saktiandi Supaat. Cryptocurrency markets have sold off sharply in recent months, with market capitalisation down by about two-thirds since its peak in November 2021. There have also been reports of the collapse of a number of crypto-related firms in the past few months. The turmoil in the cryptocurrency market has not posed financial stability risks in Singapore. Our key financial institutions do not have significant exposures to either distressed cryptocurrency firms or cryptocurrencies more broadly. The spillover to the domestic financial system has thus been very limited. To date, the impact of the cryptocurrency market on the six DPT service providers licensed under the Payment Services Act has also been limited. MAS is evaluating the financial condition of the DPT service providers that had submitted licence applications. MAS, along with other international regulators and standard setting bodies, has been closely monitoring risks and developments in the crypto ecosystem. Thus far, the focus of crypto regulation in Singapore, as in most major jurisdictions, has been on countering money laundering and terrorism financing risks. In Singapore, MAS has also gone further to restrict promotion of DPT services to the general public. Given the cross-border nature of cryptocurrency services, there needs to be broad regulatory consistency globally on rules to preserve market integrity, investor protection and financial stability.”