Singapore's monetary policy transparency has improved over the recent years, according to the International Monetary Fund (IMF). In a 2004 Financial System Stability Assessment (FSSA) published in 2005, the IMF reported that the framework was now "quite transparent," especially given the nature of Singapore's exchange rate regime based monetary policy. In the opinion of the authorities, the regime's managed float inhibits transparency, however. The IMF found a few areas where improvements could be made. It called for greater transparency regarding the Monetary Authority of Singapore's (MAS) policy tools for exchange rate intervention and suggested that greater detail be provided regarding its trade-weighted exchange rate index and the target band within which it may fluctuate. Legislation has been drafted to address some of the issues raised by the IMF, according to the MAS website. Singapore is a member of the IMF's Special Data Dissemination Standard (SDDS) and the monetary data it provides to the SDDS meets the requirements of coverage, timeliness, and periodicity.

General Overview

In a Financial System Stability Assessment (FSSA) covering the year 2004 and published in 2005, the International Monetary Fund (IMF) reported that Singapore's Monetary Authority (MAS) had made progress towards greater monetary policy transparency in recent years, and that work in this regard was ongoing. The IMF specifically referenced the regular publication of the MAS's Monetary Policy Statement, and the fact that the MAS has begun making operational information and money-market activity data available to the public. According to the IMF assessment, much of the monetary policy framework "is now quite transparent. Given the exchange rate regime-based monetary policy, however, the authorities remain cautious about the extent to which specific information about the monetary policy framework and policy operations should be made public" (p. 67) Singapore's monetary policy is vested in the MAS by the provisions of the Singapore Monetary Authority Act of 1970 (since amended), which created the Authority and specifies its mission. According to the Act, the MAS is charged with promoting monetary stability and maintaining conditions for credit and exchange that will contribute to Singapore's overall economic growth. The primary tool for achieving policy goals is through the management of the exchange rate. Singapore's exchange rate regime is that of a managed float within a not fully disclosed band against a basket of currencies of Singapore's major trade partners and competitors.

The FSSA noted concerns about potential conflicts of interest and accountability issues arising from the fact that, at that time and in full accordance with the MAS Act, the chairman of the MAS board of directors simultaneously served as the Minister of Finance (MoF) and the Deputy Prime Minister. While recognizing that no problems seemed apparent at the time of the report, there could be conflicts should monetary and fiscal policy objectives diverge or should the then-chairman's successors be less capable. The FSSA recommended that Singapore separate these roles and responsibilities out, as is consistent with international best practice. The FSSA also found that the MAS Act was somewhat ambiguous in defining and prioritizing monetary policy goals. Although these are set forth more explicitly in MAS publications, the IMF recommended that greater clarity be incorporated in the legislation, as well. In addition, the IMF's FSSA recommended the publication of more performance-assessment documents and other information that would educate the public about the MAS's actual outcomes.

At the time of the IMF's 2005 Article IV Consultations report, published in 2006, the Fund staff expressed concerns regarding the reluctance of Singapore's authorities to make available to the public information relating to the policy framework and monetary operations. This situation was first recognized in the 2004 FSSA, wherein the authorities justified their reluctance to disclose information on the weights employed in their trade-weighted exchange rate index as reasonable, given their primary monetary policy tool. The Singaporean authorizes raised a similar concern to justify their choice not to pre-announce foreign-exchange interventions by the MAS. While recognizing the validity of the Singaporean authorities overall concerns, the 2004 FSSA report suggested that consideration could be given to increasing transparency in these areas, and this recommendation was repeated in the 2006 report. It also suggested that the MAS's publications could offer more and more detailed information on activities in the financial sector and the MAS's supervision thereof.

The 2006 IMF report also acknowledged progress in resolving the structural difficulty of the MAS's chairman also holding other, potentially conflicting, government posts. The 2004 appointment of a new MAS chairman effectively ended the overlapping roles of the previous incumbent. However, the IMF noted that the chair "still holds multiple responsibilities as senior minister and within the MAS" (p. 29). These roles have been more formally documented and defined within the MAS, which should prevent conflicts of interest. In addition, the IMF reported that amendments to the MAS Act were being drafted that would improve the MAS accountability framework and clarify the MAS's functions and objectives. Additionally, the 2006 IMF publication referred directly to the earlier FSSA's recommendation that Singapore "provide more information on how supervisory actions are taken in line with the risk-based supervisory framework and disclose more information to improve the public's ability to assess supervisory performance" (p. 32). At the time of the 2006 report, this recommendation was under review, and two monographs had been published in 2004 that related to the subject: "Objectives and Principles of Financial Supervision in Singapore" and "MAS' Roles and Responsibilities in Relation to the Securities Clearing and Settlement Systems in Singapore." A 2007 press release announced the first reading by parliament of a proposed amendment to the MAS Act that is aimed at improving the Authority's accountability and governance practices. First it addresses the issue of clarifying MAS objectives and functions. Second, it seeks to "clarify the MAS Board's accountability to the Minister by providing for the Board to furnish the Minister with information regarding MAS upon request by the Minister." It also requires the MAS to provide performance reports in its annual report. Finally, it makes more explicit the conditions whereby the MAS may act as lender to the government and other public entities.

The clear and easily navigable MAS website makes a wide range of publications available directly to the public. These include biannual Monetary Policy Statements (released in April and October), the Macroeconomic Review and Financial Stability Review (both also published twice yearly), the MAS Survey of Professional Forecasters, the Monthly Statistical Bulletin and Inflation Monthly, MAS staff papers and monographs, the texts of MAS-sponsored public lectures and seminars, and a series of publications devoted to economics education. In addition, the website provides access to press releases and media-sourced articles about the MAS's activities, along with advance-release dates for monetary statistics. The 2004/2005 MAS Annual Report, published in 2005, announced that it had embarked on a program of "competency profiling" of its staff, in order to facilitate improvements in functional capabilities. The 2006/2007 Annual report, published in 2007, noted further progress in its transparency efforts, citing its increased outreach to the media, the public, and the market as a whole. It referenced the recent move toward regularly including research impacting upon monetary policy in its Macroeconomic Review, as well as its practice of releasing "ex-post weekly data on the Singapore dollar nominal effective rate index" (p. 23) on the Authority's website and in the pages of the Macroeconomic Review starting in April 2006.

A subscriber to the IMF's Special Data Dissemination Standard (SDDS) since August 1996, Singapore's monetary data is disclosed on the SDDS website. It meets all requirements for coverage, timeliness, and periodicity, as appropriate. Data are released simultaneously to all interested parties on the SDDS and MAS websites. Summary methodologies are available for all SDDS datasets except interest and exchange rates. Advance release calendars are available for most relevant datasets. Stock market share price index and exchange rate data are released daily.

The Principles

Clarity of roles, responsibilities and objectives of central banks.

EN

The 2004 IMF FSSA stated that "the MAS meets most of the elements of this principle" (p. 68). The MAS Act, the text of which is publicly available, sets forth the roles and responsibilities allocated to the MAS. The 2004 IMF FSSA found that the Act was insufficiently clear in prioritizing the Authority's objectives, although the report acknowledged that the MAS website provides more clarity on this subject. In the words of the FSSA: "Nevertheless, and while the historical performance of growth and inflation is indeed admirable, the ultimate objective of monetary policy could be more clearly stated in the legislation to prevent the potential confusion in the market" (p. 68). The MAS is governed by the provisions of the MAS Act of 1970 (as amended), which created the Authority and charged it with the duty of formulating and implementing monetary policy. The Act specifies the MAS's overall monetary policy objective (promoting monetary stability and credit and exchange conditions that will contribute to broader economic growth) and the broad means by which this shall be achieved. The FSSA noted that the MAS relies on managing the exchange rate to pursue its policy objectives, establishing a trade-weighted exchange rate index and a target policy band within which the index may fluctuate. The MAS may intervene in the foreign exchange market if circumstances require. The IMF added that there is no full disclosure of the target band.

The MAS Act provides for the president to appoint both the MAS board of directors and its chairman, both of whom are answerable to the parliament. At the time of the 2004 FSSA, the IMF noted concerns about potential conflicts of interest and accountability issues arising from the fact that the chairman of the MAS simultaneously served as the MoF and the Deputy Prime Minister. While recognizing that no such issues seemed apparent at the time of the report, there could be problems should monetary and fiscal policy objectives diverge or should the then-chairman's successors be less capable. The FSSA recommended that Singapore separate these roles and responsibilities out, as is consistent with international best practice. The FSSA also found that the MAS Act was somewhat ambiguous in defining and prioritizing monetary policy goals. Although these are set forth more explicitly in MAS publications, the IMF recommended that this greater clarity be incorporated in the legislation, as well.

According to a 2002 MAS press release (updated in 2007) available on the MAS website, the Authority's Economics Department, which originally bore the responsibility for actually formulating monetary policy, was reorganized into the Economic Policy Department (EPD) and the Macroeconomic Surveillance Department, in an effort to sharpen the focus that could be brought to bear on these two aspects of the MAS's larger mandate. While the EPD handles policy formulation, the MAS website notes that policy implementation is the responsibility of the Monetary Management Division. A 2007 press release announced the first reading by parliament of a proposed amendment to the MAS Act that is aimed at improving the Authority's accountability and governance practices. First it addresses the issue of clarifying MAS objectives and functions. Second, it seeks to "clarify the MAS Board's accountability to the Minister by providing for the Board to furnish the Minister with information regarding MAS upon request by the Minister." It also requires the MAS to provide performance reports in its annual report. Finally, it makes more explicit the conditions whereby the MAS may act as lender to the government and other public entities.

Open process for formulating and reporting monetary policy decisions.

EN

According to the IMF's 2004 FSSA, the "MAS observes many of the elements of this principle" (p. 68). The MAS publicly discloses and explains its policy framework, its targets, and the instruments it uses to achieve its goals, but the IMF suggests that this disclosure is "at a very broad level." The primary monetary policy instrument is the management of the exchange rate. According to the FSSA, "the Singapore dollar is managed against a basket of currencies of Singapore's major trade partners and competitors. The trade-weighted exchange rate index... is allowed to fluctuate within a target policy band which is not fully disclosed" (p. 67). Similarly, details regarding the MAS's interventions in the foreign exchange market are not provided in a timely fashion. This being the case, the IMF FSSA staff acknowledged a certain justification for the Singaporean authorities' reluctance to disclose too much detail on its trade-weighted exchange rate index, it argued that some greater degree of disclosure might be possible, stating that "the greater disclosure would enhance transparency and accountability without compromising the monetary policy regime" (p. 69).

The MAS website provides general public access to its semi-annual Monetary Policy Statement, in which it offers an assessment of the country's economic conditions and outlook. The Macroeconomic Review, also available on the website, offers information of the basis for macroeconomic policy, as well as details on the policy framework and targets and the policy tools to be used to achieve the MAS's goals. It additionally provides highlights of recent research in support of MAS policy decisions. A subscriber to the IMF's SDDS since August 1996, Singapore's monetary data is disclosed on the SDDS website. It meets all requirements for coverage, timeliness, and periodicity, as appropriate. Data are released simultaneously to all interested parties on the SDDS and MAS websites. Summary methodologies are available for all SDDS datasets except interest and exchange rates. Advance release calendars are available for most relevant datasets. Stock market share price index and exchange rate data are released daily.

Public availability of information on monetary policy.

CP

A subscriber to the IMF's SDDS since August 1996, Singapore's monetary data is disclosed on the SDDS website. It meets all requirements for coverage, timeliness, and periodicity, as appropriate. Data are released simultaneously to all interested parties on the SDDS and MAS websites. Summary methodologies are available for all SDDS datasets except interest and exchange rates. Advance release calendars are available for most relevant datasets. Stock market share price index and exchange rate data are released daily. The 2004 FSSA noted a recent trend toward disseminating greater amounts of monetary policy information to the public. The clear and easily navigable MAS website makes a wide range of publications available directly to the public. These include biannual Monetary Policy Statements (released in April and October), the Macroeconomic Review and Financial Stability Review (both also published twice yearly), the MAS Survey of Professional Forecasters, the Monthly Statistical Bulletin and Inflation Monthly, MAS staff papers and monographs, the texts of MAS-sponsored public lectures and seminars, and a series of publications devoted to economics education. In addition, the website provides access to press releases and media-sourced articles about the MAS's activities, along with advance-release dates for monetary statistics.

Accountability and assurances of integrity by the central bank.

CP

The FSSA noted concerns about potential conflicts of interest and accountability issues arising from the fact that, at the time and according to the MAS Act, the chairman of the MAS simultaneously served as the MoF and the Deputy Prime Minister. While recognizing that no such issues seemed apparent at the time of the report, there could be problems should monetary and fiscal policy objectives diverge or should the then-chairman's successors be less capable. The FSSA recommended that Singapore separate these roles and responsibilities out, as is consistent with international best practice. The 2004 and 2005 IMF Article IV reports both referenced a draft amendment to the MAS Act that was in progress and that sought to tighten up accountability issues such as this. The 2005 consultations noted that the 2004 appointment of a new MAS chairman effectively ended the overlapping roles of the previous incumbent. However, the IMF noted that the chair "still holds multiple responsibilities as senior minister and within the MAS" (p. 29). These roles have been more formally documented and defined within the MAS, which should help to prevent conflicts of interest.

The MAS Act requires the Authority to release its financial statements as part of the Annual Report. Part V, Section 32A requires that "the Authority shall, in every financial year, prepare a budget containing estimates of income and expenditure of the Authority for the ensuing financial year and a supplementary budget (if necessary) for any financial year and present them to the President for his approval under Article 22B of the Constitution." Section 34 of Part V of the Act mandates that the Authority provide the president with a copy of its annual accounts as certified by the Auditor General (whose mandate to perform the audit is contained in Section 33 of Part V), along with a report by the MAS board on the Authority's activities through out the past financial year. These must be produced within 6 months of the close of the financial year. The annual accounts must be published in the Gazette, and the performance report must be published by the MAS. In addition, this section of the Act requires the MAS to provide its annual accounts and annual report to parliament.

The MAS Act also confers operational authority to the MAS. Appointments to serve on the Board of Directors are made by the president, who also names the Board Chairman after consultation with the cabinet. The MAS act vests the Board of Directors with the responsibility for Authority's administration and operational policies, and charges the board with reporting to the government on MAS banking and credit policies. The MAS board is accountable to the Singapore parliament. The MAS managing director is charged by the Act with the responsibility of day-to-day administration, who is vested with all decision-making and other salient powers. The MAS website discloses that the Authority also reports to the public on its monetary policy conduct on a regular basis, through the publication of its Monetary Policy Statements and the Macroeconomic Review.

The 2004/2005 MAS Annual Report, published in 2005, announced that it had embarked on a program of "competency profiling" of its staff, in order to facilitate improvements in functional capabilities. The report also noted that the MAS Act was in its second phase of review with an eye to amending the Act in such a way as to further enhance MAS transparency and accountability. The 2006/2007 Annual Report, published in 2007, noted further progress in its transparency efforts, citing its increased outreach to the media, the public, and the market as a whole. It referenced the recent move toward regularly including research impacting upon monetary policy in its Macroeconomic Review, as well as its adoption of the practice of releasing "ex-post weekly data on the Singapore dollar nominal effective rate index" (p. 23) on the Authority's website, and in the pages of the Macroeconomic Review, starting in April 2006.

The 2004 IMF FSSA notes that MAS staff and officials are subject to the standards for conduct that are enumerated in the Authority's Operations and Procedures Manual. According to the FSSA, "the standards of incorruptibility, meritocracy, and impartiality of public servants are disclosed to the general public via provisions in the Penal Code of Singapore and by the Civil Service Corporate Statement released in 1995" (p. 70). According to the FSSA, this has contributed to Singapore's reputation for high integrity and the lack of public corruption. A 2007 press release announced the first reading by parliament of a proposed amendment to the MAS Act that is aimed at improving the Authority's accountability and governance practices. First it addresses the issue of clarifying MAS objectives and functions. Second, it seeks to "clarify the MAS Board's accountability to the Minister by providing for the Board to furnish the Minister with information regarding MAS upon request by the Minister." It also requires the MAS to provide performance reports in its annual report. Finally, it makes more explicit the conditions whereby the MAS may act as lender to the government and other public entities.

A subscriber to the IMF's SDDS since August 1996, Singapore's monetary data is disclosed on the SDDS website as meeting all requirements for coverage, timeliness, and periodicity, as appropriate. Data are released simultaneously to all interested parties on the SDDS and MAS websites. Summary methodologies are available for all SDDS datasets except interest and exchange rates. Advance release calendars are available for most relevant datasets. Stock market share price index and exchange rate data are released daily.