How MAS propelled Singapore to the top of the class
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How MAS propelled Singapore to the top of the class

Singapore’s emergence as a global financial hub is no accident, and has not happened overnight. The key, according to Ravi Menon – the managing director of financial regulator the Monetary Authority of Singapore – is to plan well, act decisively and, above all, listen.


The rise of Singapore is a remarkable story, one told throughout the 50-year history of Euromoney – a history only four years shorter than that of the island state itself, which gained its independence from Malaysia in 1965.

Today, Singapore sits proudly atop the Euromoney Country Risk (ECR) rankings. Based on ECR’s blend of financial and economic data, combined with the views of leading economists, no country in the world today has a stronger financial position. 

In 1982, when ECR was launched, Singapore ranked 14th globally. Now it leads the countries that were the leaders 37 years ago – all of the rest of the top 10 today, as was the case back then, coming from the so-called developed world. 

The role of the Monetary Authority of Singapore (MAS) in Singapore’s rise to become the global haven of financial stability is crucial. There’s no financial regulator that quite compares with the MAS. 

Like Bob Dylan, it is always evolving, learning from past mistakes and making decisions that maintain stability while advancing industries – banking, finance and digital – it sees as vital to its future. 

Piyush Gupta, chief executive of DBS, told Euromoney last year that Singapore had a “definite legitimate claim” to being the most transformed international financial centre. 

Its embrace of financial technology is a well-told tale. Fintech stars abound in the Lion City, from ride-hailing giant Grab to gaming outfit Razer, to peer-to-peer lending platform Validus. Even when the regulator is slow to join a party, like when it stalled on issuing licences to pure-play digital banks, its eventual actions suggested it was planning rather than prevaricating.


When MAS said in July 2019 that it planned to issue five new digital banking licences, analysts soon spotted that three of them were wholesale licences, open to banks and non-banks alike. 


David Lynne,
Deutsche Bank

Winners will be encouraged to lend, using digital means, to small and medium-sized enterprises and other non-retail segments – further evidence that corporate banking will be the next segment to feel the hot breath of disruption on its neck. 

“There is so much more awareness of the importance of a digital superhighway in Asia than there is in the west,” says David Lynne, chief country officer and Apac head of fixed income and currencies at Deutsche Bank. “With MAS this year deciding to issue digital banking licences, they are taking the next leap in sector liberalization.”

Much has been made of the way the regulator has encouraged financial technology to flourish by allowing tech startups to play in safety in a ‘sandbox’ before they test disruptive ideas on the public. 

Both MAS and Singapore Exchange have created “as conducive an environment as possible for fintech platforms to thrive here,” says Kuan Ern Tan, head of Singapore coverage for investment banking and capital markets at Credit Suisse. “If you have a legitimate idea, Singapore is the place they want you to sink down roots, raise capital and grow your business.” 



Ravi Menon,

For his part, MAS managing director Ravi Menon, who was reappointed for another two years in office in May, believes the fact that the regulator is both a developer and a promoter of fintech has forced it to find inventive ways to keep the financial sector safe without stifling creativity. 

Sandboxing, he tells Euromoney, is a “tool of last, not first, resort”. 

It is, he adds, “a test of how flexible your regime is. It is when your regulations are too rigid and not flexible enough to accommodate new technology that you need to resort to a sandbox.”

But it is easy to focus on fintech and to overlook the regulator’s other achievements, which include its ability not just to make good, measured decisions, but to feel comfortable and confident enough to know when to change its mind. 

Take cloud computing. In its early days, the regulator saw only its potential to damage and disrupt. 

“Ten years ago, we took a somewhat dismal view of [it], because the cloud technology at the time did not dovetail with our rules and requirements,” Menon admits. “But after consultation, solutions started adapting themselves to meet our regulatory requirements.” 

There is good reason for this about-turn – after all, no sensible regulator would reject cloud computing now, just as banks learn to embrace it. At DBS, Euromoney’s choice this year for world’s best bank, more than 805 of its open systems were cloud-ready at the end of 2018.


Joris Dierckx,
BNP Paribas

“Banks are increasingly working on hybrid models or going into the cloud; and MAS has seen that,” says Joris Dierckx, head of southeast Asia and chief executive, Singapore, at BNP Paribas. “They are very actively advocating for banks to move that infrastructure here, emphasizing the city’s safety and continuity. It’s also an important step in ensuring Singapore’s leadership position as both a financial services and innovation hub.”

That in turn binds big foreign banks more tightly to the city. Menon notes that the MAS’s sister agencies, including the Economic Development Board, “are attracting data centres and cloud service providers, not just to use Singapore as an additional storage place, but to carry out R&D here, to use the city as a base to test, to find solutions, in order to become a regional cloud computing centre. The larger vision is about creating a digital economy and a digital financial sector.”


What comes across when discussing the MAS with third parties is not just respect for its work but also for its willingness to engage and listen. 

Mrinal Parekh, head of equity capital markets, southeast Asia and India, at BNP Paribas, calls the regulator “very approachable”, while the country chief executive of another foreign lender points to a recent issue with its backup systems. 

“The regulator didn’t go mental with us,” he says. “They asked us what was wrong, if we’d taken measures and genuinely wanted to learn from the event. Elsewhere, regulators can be adversarial. That isn’t the case here.”

Evidence of long-term planning is everywhere; from the way land in the financial district is reclaimed, allowed to settle, and then occupied by tower blocks, to the city’s emergence as Asia’s preeminent foreign exchange hub

“The next phase is to become a FX e-trading hub, housing an ecosystem of pricing and matching engines,” says Menon. “There are many institutional investors in Singapore and more than 5,000 multinationals whose regional treasury and corporate functions are based here, and that generates demand for FX transactions.” 

Green finance will be as big, if not bigger than fintech in the years ahead, as climate change will touch every aspect of economic and social life - Ravi Menon, MAS

It is ahead of the game on anti-money laundering, having set up a special unit three years ago that now employs 30 specialists, and which, on a quarterly basis, publicly names and shames rule-breakers. 

“Like most public-sector organizations in Singapore, it is deeply embedded in our DNA to build and prepare for the future,” Menon says. “As a small country, if we are not alert to future trends, it is easy to get quickly overtaken and become irrelevant.”

Ever alert for a way to get ahead of the pack, the regulator is exploring ways it can lead in green finance, an asset class that is, the MAS chief says, “rapidly rising to the top of our agenda.” 

He adds: “The wider region is grappling with rising temperatures and sea levels and deforestation. Green finance will be as big, if not bigger than fintech in the years ahead, as climate change will touch every aspect of economic and social life.

“We’re exploring ways to encourage more green bonds to be issued and raised here,” he adds. “We need to build our capabilities in terms of training, competency and research, and to better understand climate change costs, creating computing and data models, [and] tackling green-washing.” 

Climate change, he adds, “could have implications for financial stability. It is important to stress-test the risks that will emerge over the next five, 10, 20 years and how they will affect the investment, insurance and reinsurance markets.”

With a nod in the direction of China’s Belt and Road Initiative (BRI), he notes that Asia is in the “early stages of a vast infrastructure boom, and Asia needs to ensure that the infrastructure that it builds is sustainable, green and environmentally resilient,” especially given that much of it will need to be financed by the private markets.

In April, ICBC Singapore printed its first green bond, raising $2.2 billion, with the proceeds earmarked for use in sustainable BRI projects. DBS was joint global coordinator on a deal that included Crédit Agricole, HSBC and ICBC. 

In September 2018, Australian real estate group Frasers Property raised S$1.2 billion ($865 million) in a syndicated green loan, underwritten by six banks including DBS, OCBC Bank, UOB and Maybank – the first of its kind under the Green Loan Principles.


Menon is also angling for a greater share of the renminbi market

“The offshore renminbi market is growing,” he says. “It has, on a few occasions, taken a few steps backward, mostly due to domestic financial stability reasons in China, but long term, the movement is toward more international use of the renminbi – and Singapore is well placed to contribute.”

The future points to more renminbi activity not just on the loans side, which is growing well, but also in terms of capital raising, he adds. “Chinese firms need to raise capital as they regionalize their operations, and this is something Singapore… can support.”

He adds: “ICBC’s renminbi clearing bank is located here, and we [have piloted cross-border renminbi financing projects] with Suzhou, Tianjin, Chongqing and other cities.” 

Singapore was the third largest centre for renminbi clearing in June 2019, according to Swift, after Hong Kong and London. Menon believes that top three will remain unchanged, with Singapore’s strength rising in renminbi-denominated FX, bonds and loans. 


These interviews took place in July, during which Hong Kong was riven by both bruising riots and demonstrations. Events that are still live as Euromoney goes to press. Bankers said the protests presented Singapore with an opportunity. 

“When Hong Kong is under pressure, Singapore benefits”, was a typical refrain. 

At the time of writing, Beijing still hadn’t reacted to protests in the former UK colony. Either way, there was one clear winner during the hot summer: the safe and super-stable Lion City, which in Euromoney’s latest risk survey, beat Hong Kong on 14 of the 15 economic, political and structural risk indicators. 

Menon declines to discuss the events directly. But he does draw a telling comparison between the two cities, which have for decades been involved in a mostly genteel fight for regional financial preeminence. 

“Hong Kong and Singapore will become different types of financial hubs,” he says. “Hong Kong will be the main gateway to the Greater China region and a formidable global financial sector in its own right. The world has confidence and trust in Hong Kong. Because of its rule of law and the way business is conducted according to international norms, that trust will remain.”

Singapore, he believes, will move in a different direction, focusing on the bigger picture. 

“We will become increasingly more important as a pan-Asian financial centre, reliable and stable, at the heart of a region growing at an average of 5% to 6% a year,” Menon says. “We have strong connectivity to South Asia and India, to Australia, and to China, Japan and Korea.” 

Hong Kong, he adds, will become “less pan-Asian and more China-centric. Singapore will continue to have strong links to China, never as strong as Hong Kong’s, but thriving really as a pan-Asian centre connecting other Asian countries to China.”

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