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Financial Liberalization and the Impact of the Financial Crisis on Singapore (No. 24)

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USD 6.00 Publisher: TWN
ISBN: 978-983-2729-93-8
Year: 2010
No. of pages: 56
Size of book: 14.5cm x 21cm
Author: Michael Lim Mah-Hui & Jaya Maru

About the Book

As one of the most developed economies in Asia, Singapore’s success is built on an outward-looking growth model driven by exports, foreign investment and international financial flows. A key element in this externally oriented strategy has been the exchange rate policy. This paper looks, among others, at how Singapore’s “basket, band and crawl” exchange rate regime has helped it to manage short-term currency fluctuations and to redress currency misalignments with underlying economic fundamentals.

However, it is the very openness of the Singapore economy which also renders it vulnerable to shocks originating abroad – and the present global financial crisis is no exception. As documented in this paper, Singapore has experienced its sharpest economic downturn in over two decades as a result of the crisis. With exports plummeting, business confidence taking a hit and foreign portfolio capital exiting its equity markets, the economy contracted and unemployment climbed up.

The crisis has exposed the limitations of Singapore’s pronounced dependence on the external sector, a dependence which arises from a small domestic market marked by sizeable income and wealth inequalities. A more sustainable growth path would entail narrowing these disparities, this paper contends, as well as reducing reliance on industrial-country markets in favour of strengthened regional economic ties.

About the Author

MICHAEL LIM MAH-HUI is a senior fellow at the Socio-economic and Environmental Research Institute (SERI) in Penang, Malaysia. He was previously a post-doctoral fellow at Duke University and Assistant Professor at Temple University in the US, and an international and investment banker.

JAYA MARU is a financial services professional based in Singapore. She has provided financial and business advisory services to leading corporations and government agencies.

Contents
  1. INTRODUCTION
    Early Years of Singapore’s Development
    Basket, Band and Crawl (BBC) Exchange Regime
    Non-internationalization of the Singapore Dollar

  2. GLOBAL FINANCIAL CRISIS – CHANNELS OF TRANSMISSION
    Impact on Banking Sector: Toxic Assets
    Equity Market and Portfolio Investment Flows
    Impact on Balance of Payments
    Impact on Trade
    Impact on Other Sectors of Real Economy
    Labour and Employment

  3. POLICY RESPONSES
    Monetary Policy Response
    Fiscal Policy Response

  4. CONCLUSIONS AND POLICY IMPLICATIONS
References

Appendix 1: Summary of MAS’s exchange rate policy since 1990    48

Appendix 2: Summary of MAS’s non-internationalization policy    50    

References 

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This product was added to our catalog on Wednesday 21 September, 2011.


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