The Monetary Authority of Singapore (MAS)
The Monetary Authority of Singapore (MAS) is the central bank of Singapore.1 In 1970, Parliament passed the Monetary Authority of Singapore Act and on 1 January 1971, MAS began operations.2 Its key focus was to supervise Singapore’s financial system and manage its reserves.3 The responsibility of issuing Singapore’s currency resided with the Board of Commissioners of Currency Singapore until its merger with MAS in October 2002.4
Prior to the creation of MAS, various monetary functions associated with a central bank were managed by a number of different government departments and agencies. The Commissioner of Banking and Commissioner for Finance Companies were responsible for the regulation and supervision of banks and finance companies. The Exchange Control Department oversaw all foreign exchange matters, while the Department of Overseas Investment was in charge of the government’s external assets. The Accountant-General’s Department handled the sale of treasury bills, controlled domestic loans, managed the clearing house system and acted as the lender of last resort in the banking system. These government bodies were directed and coordinated by the Ministry of Finance (MOF) and met weekly at MOF to discuss and decide on the country’s monetary and financial policies.5 This cumbersome system was a product of Singapore’s sudden departure from the Federation of Malaysia.6
The Monetary Authority of Singapore Bill, which proposed the establishment of MAS, was put forward by then Finance Minister Goh Keng Swee (Dr) for its first parliamentary reading on 22 July 1970.7 The bill was subsequently passed on 2 September 1970. This set MAS up as the banker and financial agent of the government. It also brought together the disparate parts of Singapore’s financial system under a single authority, allowing for the formation of unified and coherent policies.8
In order to regulate and supervise the financial sector, MAS was to exercise authority under the Banking Act of 1970, the Finance Companies Act of 1967 and the Exchange Control Ordinance of 1953 over a wide range of financial matters. These included the licensing of financial institutions; enforcing the cash-reserve ratio and liquid asset ratio in the banking system; advising banks on interest rates for deposits and loans; regulating lending activity; and purchasing gold and foreign currencies. MAS was also designated as the lender of last resort and was allocated a paid-up capital of S$30 million.9
Establishment and development
As stipulated in the MAS Act, the authority is governed by a board of directors, which is chaired by the Minister for Finance with the Permanent Secretary (Economic Development) of MOF as his deputy. Hon Sui Sen and George Edwin Bogaars were appointed as the board’s first chairman and deputy chairman respectively.10
Throughout the 1970s, the main objective of monetary policy in Singapore had been “the promotion of steady domestic economic growth with relative price stability”.11 Exchange controls on Singapore’s currency that had been implemented since 1931 to restrict buying and selling of foreign currencies by residents, or on the purchase and sale of local currency by non-residents, were relaxed in 1973 and eventually abolished in 1978. The gradual removal of exchange controls facilitated a freer flow of funds between Singapore and the rest of the world.12
In 1980, Goh Keng Swee was appointed as MAS’ chairman and he set in motion a reorganisation and restructuring of the agency to sharpen its effectiveness as Singapore’s central bank.13 A new exchange rate-centred monetary policy framework was subsequently implemented in 1981. This new policy direction was successful in mitigating and cushioning the impact of the 1985 recession and the Asian financial crisis from 1997 to 1998.14 MAS continued to tweak its system to maintain stability and high prudential standards in the financial industry. It also started to directly regulate the Stock Exchange of Singapore (SES) and, following the Pan-Electric crisis in 1985, toughened insider trading rules.15
In 1981, the Government of Singapore Investment Corporation (GIC), an investment body that manages Singapore’s excess foreign reserves and assets, was established. When MAS took over the management of reserves in 1971, Singapore was already experiencing constant capital inflows. In 1973, the total gold and foreign exchange holdings had almost doubled from the previous year to $1.43 billion. MAS started to invest more in overseas markets, and following a review of the organisation’s role and functions, GIC was incorporated with an authorised capital of $2 million.16
With the appointment of Lee Hsien Loong as its chairman in 1998, MAS shifted its emphasis from regulation to supervision to give the financial industry more room to innovate. New rules were passed to reinforce the responsibilities of the board and management of financial institutions and strengthen their corporate governance practices.17
MAS started as three departments located in two separate places. Its senior management had offices at City Hall and the other departments worked out of the Currency Board building. In 1978, MAS moved to the SIA Building at 77 Robinson Road, finally bringing the organisation under one roof.18 In 1985, MAS moved to its new MAS Building in Shenton Way.19
In 2003, MoneySENSE, a nation-wide financial education programme, was launched to empower consumers by enhancing their knowledge of common financial products and services, and enabling them to make informed financial decisions.20
MAS has also engaged the international community. In 2002, negotiations with the U.S. on a Free Trade Agreement (FTA) commenced.21 The US-Singapore FTA came into force on 1 January 2004, and between January to November 2005, total trade between the two countries reached $70 billion.22 In 2006, Singapore hosted the IMF-World Bank Annual Meetings.23
In June 2010, MAS was accepted as the 10th signatory to the International Association of Insurance Supervisors (IAIS) Multilateral Memorandum of Understanding (MMOU). The MMOU provides a formal basis for cooperation and information sharing by defining a common set of principles and procedures for information exchange between signatory authorities regarding the supervision of insurance companies.24
In September 2010, MAS successfully hosted the 16th International Conference of Banking Supervisors (ICBS) which was jointly organised with the Basel Committee on Banking Supervision (BCBS).25
In 2011, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Bank for Reconstruction and Development/International Development Association (IBRD/IDA) set up a World Bank-Singapore Hub for knowledge and financial activities for Asia and beyond.26
1. “About Us,” Monetary Authority of Singapore, n.d.
2. The Monetary Authority of Singapore Act (Commencement) Notification 1970, Sp. S. 341/1970, Government Gazette. Subsidiary Legislation Supplement, 1970, 1301–02. (Call no. RSING 348.5957 SGGSLS)
3. Ignatius Low, Fiona Chan and Gabriel Chen, Sustaining Stability: Serving Singapore (Singapore: Straits Times Press, 2012), 34. (Call no. RSING 332.11095957 LOW)
4. Currency (Amendment) Act (Commencement) Notification 2002, Sp. S. 507/2002, Government Gazette. Subsidiary Legislation Supplement, 2002, 3804 (Call no. RSING 348.5957 SGGSLS); “Currency Board's Merger with MAS Takes Effect Today,” Straits Times, 1 October 2002, 19. (From NewspaperSG)
5. Monetary Authority of Singapore, Annual Report (Singapore: Monetary Authority of Singapore, 1972), 23–24. (Call no. RCLOS 332.495957 MASAR)
6. “Singapore Central Bank: Step One,” Singapore Herald, 28 July 1970, 16. (From NewspaperSG)
7. Parliament of Singapore, First Reading of the Monetary Authority of Singapore Bill, vol. 30 of Parliamentary Debates: Official Report, 22 July 1970, col. 133. (Call no. RSING 328.5957 SIN)
8. “M.A.S. – The Govt’s Banker in a Modern Monetary System,” Straits Times, 3 September 1970, 28. (From NewspaperSG)
9. Parliament of Singapore, Second Reading of the Monetary Authority of Singapore Bill, vol. 30 of Parliamentary Debates: Official Report, 2 September 1970, col. 213. (Call no. RSING 328.5957 SIN)
10. Parliament of Singapore, Government Gazette, G. N. 3982, 24 December 1970, 5044–45. (Call no. RSING 959.57 SGG)
11. Low, Chan and Chen, Sustaining Stability, 35.
12. Low, Chan and Chen, Sustaining Stability, 71–72; Soh Tiang Keng, Lifting of Curbs Indicative of Maturity,” Business Times, 9 May 1978, 1. (From NewspaperSG)
13. Low, Chan and Chen, Sustaining Stability, 15; Conrad Raj, “Clearing the Storm Clouds Over MAS…,” Straits Times, 13 March 1981, 8. (From NewspaperSG)
14. Low, Chan and Chen, Sustaining Stability, 36–37.
15. Low, Chan and Chen, Sustaining Stability, 116; Chan Oi Chee, “Daily Supervision Ruled Out,” Business Times, 1 April 1986, 1. (From NewspaperSG)
16. Low, Chan and Chen, Sustaining Stability, 91–94; Lillian Chew, “Government Forms Investment Arm,” Business Times, 13 June 1981, 1. (From NewspaperSG)
17. Low, Chan and Chen, Sustaining Stability, 120–121; “Building a Framework for the Longer Term,” Business Times, 19 February 1998, 4; Jean Chia, “Unveiled: Plan to Reshape Capital Market,” Straits Times, 27 May 1998, 1. (From NewspaperSG)
18. Low, Chan and Chen, Sustaining Stability, 14–15.
19. Low, Chan and Chen, Sustaining Stability, 17; “MAS’s New View from the Top,” Business Times, 30 May 1985, 26. (From NewspaperSG)
20. Low, Chan and Chen, Sustaining Stability, 135; Geneieve Cua, “How to Make Dollars and Sense,” Business Times, 17 October 2003, 13 (From NewspaperSG); “About Us,” Moneysense, n.d.
21. Low, Chan and Chen, Sustaining Stability, 216.
22. “Finding Our Own Way Forward,” Business Times, 28 July 2006, 26. (From NewspaperSG)
23. Krist Boo, “Getting Ready to Play the Perfect Host,” Straits Times, 28 July 2006, 1. (From NewspaperSG)
24. “International Cooperation,” Monetary Authority of Singapore, n.d. 25. Monetary Authority of Singapore, “International Cooperation.”
26. Monetary Authority of Singapore, “International Cooperation.”
The information in this article is valid as at April 2019 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history on the subject. Please contact the Library for further reading materials on the topic.