The Financial Authority of Singapore (MAS) launched right now (July 19) its annual report for 2021 and 2022, which outlines what the central financial institution has been doing and what it has achieved over the previous yr. 

On the media convention for the report’s launch, MAS managing director Ravi Menon, in addition to MAS chairman Tharman Shanmugaratnam commented on the financial outlook for Singapore, in addition to make clear sure MAS insurance policies.

New and improved crypto rules on the horizon

In line with MAS, it has plans to extend the scope of its cryptocurrency rules to cowl extra actions and additional restrict retail investor entry to cryptocurrencies. 

Thus far, rules have been targeted on cash laundering and terror financing, and many don’t cowl points akin to client safety, market conduct, and reserve backing for stablecoins.

MAS has thus introduced that critiques and consultations are underway to be able to strengthen regulation in these areas.

The regulatory physique has additionally reiterated its stance that cryptocurrencies are extremely dangerous investments and unsuitable for the retail public.

MAS continues to undertake a balanced strategy in fostering sound and sustainable development of the digital asset ecosystem. It welcomes progressive use of blockchain know-how that may improve effectivity and convey price effectiveness, together with in cross-border funds and commerce finance. MAS points licences to cost service suppliers that add worth to this ecosystem and have robust threat administration capabilities.

Given the extremely speculative nature of cryptocurrency investments, MAS has additionally stepped up efforts to warn that such investments aren’t appropriate for retail buyers, and since January this yr, prohibited the advertising or promoting of digital cost token providers to most of the people in Singapore.

– Tharman Shanmugaratnam, Chairman of MAS Board

Ravi Menon echoed these sentiments, saying that “the important thing lesson from the upheaval within the world crypto business is obvious: investing in cryptocurrencies is extremely dangerous.”

He additionally introduced an upcoming Inexperienced Shoots seminar, the place MAS would share extra on its methods to develop Singapore as a digital asset hub, and supply additional clarification on the regulatory place on cryptocurrencies, stablecoins, and all issues blockchain.

On the similar time, Menon additionally addressed the crashes of high-profile crypto firms in Singapore.

Citing the crises at Terraform Labs, Three Arrows Capital, and Vauld, Menon said that none of them have been regulated and had little to do with Singapore.

He additionally assured the general public that “MAS and related authorities companies will take agency enforcement motion if any entity is discovered to be conducting unlawful actions or performing regulated actions with out a licence. The crypto business globally continues to be evolving and regulation continues to be catching up with business developments.”

Inflation and financial coverage

Each audio system additionally addressed inflation as a key concern in Singapore, with Tharman noting that financial coverage has been tightened 4 occasions since October 2021 to “guarantee medium-term worth stability”.

He expressed hope that these strikes ought to gradual inflationary pressures, but in addition warned that they can not totally mitigate the consequences of world inflation, particularly in meals and power costs. 

Menon additionally famous that inflationary pressures had already begun to extend through the second half of 2021, and costs had already been on the rise even earlier than the Russian invasion of Ukraine.

One other issue for inflation has been an elevated demand for labour, on the similar time when labour power participation has not but recovered from the pandemic. 

Each home and international pressures have meant that inflation is increased than anticipated, and is anticipated to worsen earlier than it will get higher.

MAS expects core inflation to extend to a peak of 4.0 to 4.5 per cent through the third quarter of 2022, however degree off in direction of the tip of the yr.

A brief technical recession can be anticipated, to be able to carry costs down and tame inflation whereas setting the stage for a sustained restoration in development. As such, financial development in Singapore is anticipated to gradual.

To take care of inflation, MAS is utilising a multi-pronged strategy, combining financial coverage to dampen inflation, fiscal help for weak teams, and labour market changes to forestall inflation turning into entrenched.

Regardless of this, Menon reiterated that “financial coverage ought to be utilized in a balanced and calibrated method and never search to fully offset inflation.

Featured Picture Credit score: Financial Authority of Singapore