Monetary Policy Implementation in Singapore

Hwee Kwan Chow and Fot Chyi Wong ()
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Fot Chyi Wong: Singapore Management University

Chapter Chapter 6 in Monetary Policy Implementation in East Asia, 2020, pp 73-83 from Springer

Abstract: Abstract Singapore’s monetary policy is centred on the management of the Singapore dollarSingapore Dollar /Singapore dollar exchange rate against a trade-weighted basket of currenciesBasket of currencies of its major trading partners. The Monetary Authority of SingaporeMonetary Authority of Singapore (MAS) (Singapore) (MAS) manages the Singapore dollar exchange rate within an undisclosed band by intervening in the foreign exchange marketForeign exchangemarket as necessary through the purchase and sale of the Singapore dollar against the US dollarUS Dollar (USD). In the context of a small open economy, the choice of the exchange rate as an instrument of monetary policy implies that the domestic interest rateDomestic interest rate is endogenous. As such, MAS’ money-market operationsMoney-market operations are aimed at ensuring adequate liquidityLiquidity in the banking system to meet the demand of banks for reserves both for the statutory reserve requirementStatutory reserve requirement as well as for the settlement of interbank transactionsInter-bank transactions. Given Singapore’s status as an international financial centreFinancial centre and the attendant high degree of capital mobilityCapital mobility, monetary policy operationsMonetary Policyoperations in Singapore—involving foreign exchange interventionsForeign exchangeinterventions and money-market operationsMoney-market operations—are not without their challenges. This chapter discusses the key features in the market mechanisms and operating procedures that enhance the effective implementation of monetary policy operationsMonetary Policyoperations in Singapore.

Date: 2020
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DOI: 10.1007/978-3-030-50298-0_6

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