IDEAS home Printed from https://ideas.repec.org/a/wsi/serxxx/v60y2015i03ns0217590815500319.html
   My bibliography  Save this article

Monetary Policy And Financial Sector Development

Author

Listed:
  • PETER WILSON

    (Singapore Management University, School of Economics, 90 Stamford Road, Singapore 178903, Singapore)

Abstract

This paper reviews Singapore's monetary policy and financial development since independence, including the immediate challenges in the 1960s, the turbulent years of the 1970s with the collapse of the Bretton Woods fixed exchange rate system and the global oil shocks of 1973 and 1979, the introduction of a unique exchange rate-centered monetary policy in 1981, the Asian financial crisis of 1997–1998 and the global financial crisis of 2007–2009. Despite being a late starter (1971) and given a number of obstacles, not least the high degree of openness of the Singapore economy to trade and capital flows, the Monetary Authority of Singapore has built up a high degree of credibility within a relatively short space of time and delivered low and stable inflation. Although financial development has been "government made" rather than market-driven, proactive and sensible policies have built on Singapore's long history as a regional trading hub to turn Singapore into a premier financial center in terms of foreign exchange trading, offshore money market intermediation and asset management. Nonetheless, some challenges remain: How monetary policy can deal with asset price bubbles and deflationary pressures and steer a careful course to maintain price stability without jeopardizing Singapore's transitory restructuring process to achieve sustainable economic growth.

Suggested Citation

  • Peter Wilson, 2015. "Monetary Policy And Financial Sector Development," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(03), pages 1-25.
    • Handle: RePEc:wsi:serxxx:v:60:y:2015:i:03:n:s0217590815500319
    DOI: 10.1142/S0217590815500319
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0217590815500319
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0217590815500319?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Peter Wilson & Gavin Peebles, 2005. "Don’t Frighten the Horses – the Political Economy of Singapore’s Foreign Exchange Rate Regime since 1981," Development Economics Working Papers 22583, East Asian Bureau of Economic Research.
    2. International Monetary Fund, 2001. "Singapore: Selected Issues," IMF Staff Country Reports 2001/177, International Monetary Fund.
    3. Gavin Peebles & Peter Wilson, 2002. "Economic Growth and Development in Singapore," Books, Edward Elgar Publishing, number 2468.
    4. Kenneth S. Chan & Kee Jin Ngiam, 1996. "Currency Speculation and the Optimum Control of Bank Lending in Singapore Dollar: A Case for Partial Liberalization," IMF Working Papers 1996/095, International Monetary Fund.
    5. Mr. Eric Parrado, 2004. "Singapore's Unique Monetary Policy: How Does it Work?," IMF Working Papers 2004/010, International Monetary Fund.
    6. Ana Santacreu & Ilian Mihov, 2013. "Exchange rates as an instrument of monetary policy," 2013 Meeting Papers 773, Society for Economic Dynamics.
    7. Gavin Peebles & Peter Wilson, 1996. "The Singapore Economy," Books, Edward Elgar Publishing, number 871.
    8. Kenneth S. Chan & Kee Jin Ngiam, 1996. "Currency Speculation and the Optimum Control of Bank Lending in Singapore Dollar: A Case for Partial Liberalization," IMF Working Papers 1996/095, International Monetary Fund.
    9. Peter Wilson & Henry Ng Shang Ren, 2008. "The Choice Of Exchange Rate Regime And The Volatility Of Exchange Rates Before And After The Asian Crisis: A Counterfactual Analysis," Australian Economic Papers, Wiley Blackwell, vol. 47(1), pages 92-114, March.
    10. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sequeira, John M., 2021. "Monetary policy surprises, stock returns, and financial and liquidity constraints, in an exchange rate monetary policy system," The Quarterly Review of Economics and Finance, Elsevier, vol. 81(C), pages 226-236.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Basant K. Kapur, 2007. "Capital Flows and Exchange Rate Volatility: Singapore's Experience," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 575-608, National Bureau of Economic Research, Inc.
    2. Bennett T. McCallum, 2007. "Monetary Policy in East Asia: The Case of Singapore," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 25(S1), pages 13-28, December.
    3. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777.
    4. Arief Ramayandi, 2007. "Approximating Monetary Policy: Case Study for the ASEAN-5," Working Papers in Economics and Development Studies (WoPEDS) 200707, Department of Economics, Padjadjaran University, revised Aug 2007.
    5. Akhand Akhtar Hossain, 2015. "The Evolution of Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 14611.
    6. International Monetary Fund, 2016. "Asean-5 Cluster Report: Evolution of Monetary Policy Frameworks," IMF Staff Country Reports 2016/176, International Monetary Fund.
    7. Yoshino, Naoyuki & Kaji, Sahoko & Asonuma, Tamon, 2016. "Exchange rate regime switching in Malaysia and Singapore in response to China’s move to a basket peg: A DSGE analysis," Journal of Asian Economics, Elsevier, vol. 46(C), pages 17-37.
    8. Jesus M. Garcia-Iglesias & Rebeca Muñoz Torres & George Saridakis, 2013. "Did the Bank of Mexico follow a systematic behaviour in its transition to an inflation targeting regime?," Applied Financial Economics, Taylor & Francis Journals, vol. 23(14), pages 1205-1213, July.
    9. Teo, Wing Leong, 2009. "Can exchange rate rules be better than interest rate rules?," Japan and the World Economy, Elsevier, vol. 21(3), pages 301-311, August.
    10. Carlos Garcia & Jorge Restrepo & Mr. Scott Roger, 2009. "Hybrid Inflation Targeting Regimes," IMF Working Papers 2009/234, International Monetary Fund.
    11. Peter Wilson & Henry Ng Shang Ren, 2006. "Managing Exchange Rate Volatility : A Comparative Counterfactual Analysis Of Singapore 1994 To 2003," Macroeconomics Working Papers 22584, East Asian Bureau of Economic Research.
    12. Heipertz, Jonas & Mihov, Ilian & Santacreu, Ana Maria, 2022. "Managing macroeconomic fluctuations with flexible exchange rate targeting," Journal of Economic Dynamics and Control, Elsevier, vol. 135(C).
    13. Shinji Takagi & Vitalie Ciubotaru, 2013. "Putting the Pieces Together: The Moldovan Exchange Rate Policy Puzzle," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 5(1).
    14. Luis Jácome & Eric Parrado, 2006. "The Quest for Price Stability in Central America and the Dominican Republic," Working Papers Central Bank of Chile 390, Central Bank of Chile.
    15. Gregor Hopf, 2006. "A Critical Assessment Of Past Investigations Into Singapore'S Saving Behavior," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 51(01), pages 67-90.
    16. Arief Ramayandi, 2009. "Assessing Monetary Policy Efficiency in the ASEAN-5 Countries," Working Papers in Economics and Development Studies (WoPEDS) 200902, Department of Economics, Padjadjaran University, revised Mar 2009.
    17. Carlos Garcia & Jorge Restrepo & Scott Roger, 2009. "Hybrid Inflation Targeting Regimes1," ILADES-UAH Working Papers inv226, Universidad Alberto Hurtado/School of Economics and Business.
    18. Stefan Gerlach & Petra Gerlach-Kristen, 2006. "Monetary policy regimes and macroeconomic outcomes: Hong Kong and Singapore," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in Asia: approaches and implementation, volume 31, pages 40-64, Bank for International Settlements.
    19. International Monetary Fund, 2015. "Singapore: Staff Report for 2015 Article IV Consultation," IMF Staff Country Reports 2015/199, International Monetary Fund.
    20. Wilson, Peter, 2002. "Prospects for Asian Monetary Cooperation After the Asian Financial Crisis. Pipedream or Possible Reality?," EIJS Working Paper Series 151, Stockholm School of Economics, The European Institute of Japanese Studies.

    More about this item

    Keywords

    Singapore; monetary policy; financial development; E5; F4; G1;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G1 - Financial Economics - - General Financial Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:serxxx:v:60:y:2015:i:03:n:s0217590815500319. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/ser/ser.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.