IMPACTS OF AGEING POPULATION ON MONETARY AND EXCHANGE RATE MANAGEMENT IN SINGAPORE

Paul S. L. Yip () and K. C. Tan ()
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Paul S. L. Yip: Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Nanyang Avenue, Singapore 639798, Singapore
K. C. Tan: Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Nanyang Avenue, Singapore 639798, Singapore

The Singapore Economic Review (SER), 2008, vol. 53, issue 02, 245-259

Abstract: This policy note finds that the ageing of the population in Singapore will cause a reversal of the current net Central Provident Fund (CPF) contribution into a substantial net CPF withdrawal from 2025, with a peak occurring at 2035. The result is qualitatively robust to changes in the underlying assumptions of the projection. The paper then highlights the implications of this change on the exchange rate and monetary management in Singapore. Finally, the paper proposes policy measures that can help (a) mop up the excess liquidity due to the net CPF withdrawals; and (b) maintain the Monetary Authority of Singapore (MAS)'s influence on Singapore's exchange rate at a reasonable level in the longer future.

Keywords: Ageing population; Central Provident Fund; exchange rate system; monetary policy; Singapore (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1142/S0217590808002926

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