The Monetary Authority of Singapore (MAS) seeks to promote a sound and progressive financial services sector. Our supervision of the financial sector has six distinct objectives, with promoting a stable system as the overarching objective.
MAS is guided by twelve principles which collectively characterise our supervisory approach as one that is risk-focused, stakeholder-reliant, disclosure-based and supportive of enterprise.
Overview of MAS objectives, functions and principles to promote a sound and progressive financial services sector.
Principle 1: Emphasise risk-focused supervision rather than one-size-fits-all regulation
One-size-fits-all regulation is ineffective in a rapidly changing environment, and could be unnecessarily restrictive.
With risk-focused supervision, MAS evaluates an institution’s risk profile by considering the quality of its risk management systems and controls. Well-managed institutions enjoy greater business latitude while stricter requirements are imposed on weaker institutions.
Principle 2: Assess adequacy of an institution’s risk management in the context of its risk and business profiles
MAS takes a proportionate approach to assessing an institution’s risks. MAS expects institutions engaging in complex activities and businesses to have in place risk management capabilities that match their risk appetite and operations.
Principle 3: Allocate scarce supervisory resources according to impact and risks
MAS allocates supervisory resources according to the potential impact a financial institution (FI) would have on Singapore’s financial system,
economy and reputation in the event of a significant mishap (e.g. financial failure, and prolonged disruption of business operations), and also the likelihood of these significant mishaps occurring.
MAS therefore allocates more resources to systemically-important institutions and institutions with higher risk profiles, including those posing higher money laundering and terrorism financing risks.
Principle 4: Ensure institutions are supervised on an integrated (across industry) and consolidated (across geography) basis
MAS supervises institutions on an integrated basis, i.e. whole-of-group across banking, insurance and capital markets activities, and in the case of a bank headquartered in Singapore, on a consolidated basis, covering both its Singapore and overseas operations.
MAS ensures institutions are supervised on an integrated (across industry) and consolidated (across geography) basis
Principle 5: Maintain high standards in financial supervision, including observing international standards and best practices
MAS strives to maintain high standards in financial supervision, benchmarking itself against international standards and best practices.
With Singapore being an international financial centre with a strong stake in global financial stability, MAS contributes actively in regional and international initiatives to enhance regulatory standards and supervisory training.
Principle 6: Seek to reduce the risk and impact of failure rather than prevent the failure of any institution
MAS does not guarantee the soundness of FIs due to moral hazard and the undesirable consequences of excessive regulatory burden.
Consumers need to recognise that risks are inherent in financial transactions.
MAS seeks to reduce the risk of failure of institutions through increased supervision where it is appropriate and effective. MAS will also take measures to limit the impact of a failure.
MAS maintains high standards in financial supervision, including observing international standards and best practices