Building a Global Financial Centre (1971–2008) — a part of the book Singapore as an International Financial Centre by Dr Alexander Ressos.
Part D follows the development of Singapore into a global financial centre, through state investment, the growth of markets, the Asian financial crisis and the liberalisation that followed it.
This part belongs to Singapore as an International Financial Centre by Dr Alexander Ressos, published here in full, section by section.
State Capital: CPF, Temasek and GIC
Few financial centres are shaped as strongly by the savings of their own state as Singapore. Every working citizen and permanent resident pays a share of wages into the Central Provident Fund. Read more Singapore · Global CentreThe Central Provident Fund
The Central Provident Fund grew out of a debate of the early 1950s about how to provide for workers in old age. Read more Singapore · Global CentreTemasek Holdings
By the early 1970s the government owned stakes in a wide range of enterprises created during the industrialisation drive of the 1960s, which Chapter C.III describes. Read more Singapore · Global CentreGIC and the management of reserves
GIC owes its existence to the persistent surpluses of the 1970s. Read more Singapore · Global CentreGovernance, transparency and the Santiago Principles
The protection of the reserves is written into the Constitution. Read more Singapore · Global CentreState capital as anchor of the financial centre
The most direct contribution of state capital to the financial centre has been through mandates to external managers. Read more Singapore · Global CentrePractical consequences for asset managers, banks and advisers
For practitioners, Singapore’s state capital is first a set of counterparties. Asset managers seek mandates from GIC and Temasek. Read more Singapore · Global CentreSingapore and Geneva: state capital and private wealth
The contrast with Switzerland could hardly be sharper. Switzerland has no sovereign wealth fund in the sense of GIC or Temasek. Read more Singapore · Global CentreState Capital: CPF, Temasek and GIC: summary
The Central Provident Fund, launched on 1 July 1955 as a compulsory savings scheme, became after 1968 the instrument through which Singapore financed home ownership, health care and retirement,… Read more Singapore · Global CentreSIMEX, Barings and the Discipline of Markets
On Sunday 26 February 1995 administrators were appointed to Barings, the oldest merchant bank in London, after a trader in its Singapore futures subsidiary had run up losses that exceeded the… Read more Singapore · Global CentreThe Stock Exchange of Singapore
Trading in shares in Singapore began informally among brokers who dealt in the securities of rubber and tin companies, banks and trading houses, whose development Part B described. Read more Singapore · Global CentreSIMEX and financial futures
The futures market of Singapore grew out of a commodity exchange. The Gold Exchange of Singapore traded gold futures. Read more Singapore · Global CentreThe collapse of Barings in 1995
Barings had been present in London merchant banking for more than 230 years. In the late 1980s it entered new businesses, above all securities trading through Baring Securities Limited. Read more Singapore · Global CentreRegulatory responses and market discipline
The collapse produced two official inquiries, one in each country. Read more Singapore · Global CentreThe merger into the Singapore Exchange
By the late 1990s both exchanges faced a changed environment. Electronic trading allowed orders to cross borders instantly, while new trading systems competed with the traditional exchanges. Read more Singapore · Global CentreSIMEX, Barings and the Discipline of Markets: summary
Singapore’s stock exchange grew from a brokers’ association of 1930 into a market shared with Malaysia until 1973, while the Pan-Electric crisis of 1985, which closed the exchange for three days,… Read more Singapore · Global CentreThe Asian Financial Crisis of 1997
Financial centres are tested in crises. Their institutions, their banks and their currencies reveal in a few months of turmoil the strengths and weaknesses that years of growth had hidden. Read more Singapore · Global CentreOrigins of the crisis in the region
The economies of Southeast Asia had grown rapidly for a decade before 1997. Read more Singapore · Global CentreSingapore's exposure and resilience
Singapore was hurt less than its neighbours, as the Deputy Prime Minister and chairman of MAS, Lee Hsien Loong, explained in Tokyo in September 1998. Read more Singapore · Global CentreMonetary and fiscal responses
Singapore conducts monetary policy through the exchange rate, managing the Singapore dollar against a trade-weighted basket of currencies within a policy band. Read more Singapore · Global CentreRegional consequences for banking and trade
The crisis exposed a weakness of the local banks that had little to do with their regional loans. Read more Singapore · Global CentreThe crisis as a turning point for strategy
The most important consequence of the crisis for Singapore was strategic. Paradoxically, the review of financial sector policy had begun before the crisis reached Singapore. Read more Singapore · Global CentreThe Asian Financial Crisis of 1997: practical consequences
The crisis of 1997 remains relevant for those who use Singapore as a financial centre today. Read more Singapore · Global CentreComparison with Hong Kong and Geneva
Hong Kong faced the same crisis with a different monetary regime. Its currency board, which links the Hong Kong dollar to the US dollar, left no room for depreciation. Read more Singapore · Global CentreThe Asian Financial Crisis of 1997: summary
The Asian financial crisis began with the floating of the Thai baht on 2 July 1997 and spread through Southeast Asia and Korea, causing output to collapse in the most affected economies in 1998. Read more Singapore · Global CentreLiberalisation after 1998: Banks, Markets and the Opening of the Sector
For three decades after independence, Singapore built its financial centre on a paradox. Offshore, in the Asian Dollar Market and on SIMEX, it was one of the most open markets in Asia. Read more Singapore · Global CentreThe Financial Sector Review Group
The review that transformed the financial sector began as a response to global trends and only later became a response to a regional crisis. Read more Singapore · Global CentreOpening the banking sector to foreign banks
Before 1999 the many foreign banks in Singapore had only limited access to the domestic market. At the end of March 1998 Singapore had 154 commercial banks. Read more Singapore · Global CentreConsolidation of the local banks
The opening of the market was intended to change the local banks as much as to admit foreign ones. Read more Singapore · Global CentreCapital markets reform and the Singapore Exchange
The stock exchange was the second target of the reforms. Read more Singapore · Global CentreFrom supervision by rules to supervision by risk
The supervisory approach that MAS abandoned in 1998 had served Singapore well in one respect. Read more Singapore · Global CentrePractical consequences: entering and owning a bank in Singapore
The reforms after 1998 created the licence structure that foreign banks still navigate. A foreign bank that wishes to serve retail customers must hold a full bank licence. Read more Singapore · Global CentreLiberalisation after 1998: Banks, Markets and the Opening of the Sector: Comparison with Geneva and Hong Kong
Switzerland opened its financial sector in the same decade, by a different route. The Swiss banks had long fixed their fees through agreements administered by the Swiss Bankers Association. Read more Singapore · Global CentreLiberalisation after 1998: Banks, Markets and the Opening of the Sector: summary
The Financial Sector Review Group, chaired by Lee Hsien Loong from 1997, worked through private sector committees and changed the philosophy of MAS from detailed regulation to supervision,… Read more Singapore · Global CentreThe Wealth Management Strategy of the 2000s
In 1971, six years after independence, Lee Kuan Yew declared that Singapore set out to be to Southeast Asia what Switzerland was to Europe, “a money and gold market”. Read more Singapore · Global CentreWealth management as a strategic priority
The policy of the 2000s grew out of an earlier decision to develop fund management. Read more Singapore · Global CentreBanking secrecy under the Banking Act
Banking secrecy in Singapore rests on statute. Read more Singapore · Global CentreTrust law reform and the Trust Companies Act
Private banking in the common law world rarely serves individuals alone. Read more Singapore · Global CentrePrivate banks from Switzerland, Europe and Asia
Swiss banks had been present in Singapore long before the wealth management strategy. The Union Bank of Switzerland (SBG) opened its first representation in Singapore in 1971. Read more Singapore · Global CentreThe Wealth Management Strategy of the 2000s: practical consequences
The wealth management strategy of the 2000s left a legal and institutional inheritance that shapes practice today. Read more Singapore · Global CentreSingapore and Geneva: competition and complementarity
The comparison between Singapore and Geneva begins with secrecy. Read more Singapore · Global CentreThe Wealth Management Strategy of the 2000s: summary
From 1998 the government of Singapore and MAS pursued a deliberate strategy to turn the city into a global centre for asset and wealth management, using public mandates to private managers, tax… Read more