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Singapore; Financial Sector Assessment Program; Technical Note-Financial Stability Analysis and Stress Testing

International Monetary Fund

No 2019/228, IMF Staff Country Reports from International Monetary Fund

Abstract: This technical note Financial Stability Analysis and Stress Testing on Singapore contributes to the assessment of the stability and soundness of the financial sector with a comprehensive set of risk analyses. The work combines an examination of key risk indicators with detailed stress tests, which simulate the health of banks, insurers, nonfinancial corporates and households under severe yet plausible (counterfactual) adverse scenarios. Scenarios include global financial market turmoil, a major slowdown of economic activity in China, cyber-attacks and extreme flooding. The analyses include simulations of contagion within the international banking network, within the domestic banking system and between different types of financial institutions in the financial system. The stress tests reveal that the financial system is broadly resilient to severe adverse shocks; however, foreign exchange liquidity is a key vulnerability. The analyses suggest that Monetary Authority of Singapore should continue strengthening its surveillance by closing data gaps and developing its analytical tools. Further data collection on domestic interlinkages, household mortgage debt at the borrower level, insurers’ balance sheets would enhance surveillance.

Keywords: Stress testing; Banking; Domestic systemically important banks; Insurance companies; Capital adequacy requirements; ISCR,CR,U.S. dollar,financial market,banking group,financial system,sensitivity analysis,solvency stress tests (search for similar items in EconPapers)
Pages: 103
Date: 2019-07-15
New Economics Papers: this item is included in nep-sea
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