What is the Function of MAS Singapore?
The Monetary Authority of Singapore (MAS) has long been the gold standard for responsible, sustainable finance. As well as operating as the Singapore Central Bank, MAS does far more than simply print money.
Anyone working within the world of Fintech (finance and technology) should be aware of MAS, what it does, and how it maintains Singapore’s reputation as one of the leading economic centers in the world.
Let’s take a closer look at MAS, SG.
What is the Monetary Authority of Singapore (MAS)?
MAS Singapore was established in 1971 as a response to the difficulties experienced with communication and coordination across government departments. SG MAS was designed as a central authority that would consolidate all monetary policy across the city-state.
MAS’s goal has always been to promote sustained economic development, with an emphasis on non-inflationary growth. Furthermore, the mission of the Singapore Central Bank is to provide a progressive and stable global financial center.
The Role of MAS
Legacy financial institutions worldwide have often been accused of failing to adapt to modern consumers’ and businesses’ needs.
However, in recent years, innovative Fintech organizations have done much to alter the playing field. MAS, SG is one of the few that continues to adapt in our fast-moving world. The distinct roles of MAS can be boiled down to:
Supervision of Financial Services
MAS regulates the financial sector within Singapore. It adapts and supervises all financial goings-on while ensuring high levels of transparency and disclosure.
Controls the Government’s Financial Reserves
MAS serves as the government’s banker. The government can make deposits through MAS and transact globally.
Issues Government Securities
Any securities issued by the government are ultimately controlled by MAS.
MAS Policies and Responsibilities
MAS Singapore plays a huge role in the lives of ordinary Singaporeans and regional businesses. Despite their subtleties, their practices affect nearly all daily operations. Here are the main areas in which SG MAS operates:
Perhaps the primary responsibility of MAS is the printing of money. The Monetary Authority of Singapore has sole control over the printing of all banknotes within the country.
When printing money, MAS must consider inflation, interest rates, and currency devaluation.
Currency valuations are adjusted based on the Basket of Currencies. MAS aggregates the exchange rate between the Singaporean dollar and four major trading partners. Rather than basing the exchange rates against a single partner, it aggregates against multiple partners.
This enables MAS to maintain a relative strength or weakness between its currency and other currencies. The currencies within the basket remain secret to prevent foreign manipulation.
Interest Rate Policy
Unlike other countries, MAS Singapore essentially allows interest rates to “float” according to the global markets. Singapore focuses more on its exchange rates rather than having one single control mechanism for interest rates.
Due to the country’s size, this interest rate policy allows Singapore to compete with larger trading partners and remain a global finance hub.
The rise of Fintech has heaped another role onto the broad shoulders of MAS Singapore. The organization is responsible for dictating Fintech policies in areas like data sharing, data security, and privacy.
The Monetary Authority of Singapore must now implement, enforce, and support organizations in upgrading legacy systems to meet an advancing global world’s new requirements.
So, why is this relevant to businesses?
Major Fintech organizations and startups often establish themselves in Singapore due to its business-friendly environment and strong global trade position. To facilitate this, MAS introduced the FinTech Regulatory Sandbox in 2016. This allows both startups and established financial institutions to experiment in a safe, controlled environment before entering the market.
However, standards remain higher than in other nations, so entrepreneurs must be aware of the city-state’s strong data, security, and privacy policies.
As part of Singapore’s ambition to become a smart nation, MAS is responsible for encouraging innovation within the Fintech sector. To this end, they regularly award grants within the industry.
MAS’s role in promoting innovation is more robust than the central banks of other nations, which is why Singapore is such an attractive hub for growing businesses. Startups offering nascent Fintech products have the opportunity to establish themselves in Singapore and claim financial help through MAS.
Companies offering Fintech products must carefully examine the policies of MAS if they want to operate within this hub of innovation. For a business looking to compete in the Asia-Pacific market, a presence in Singapore is critical. However, you must know the ins and outs of data security if you want to succeed in the industry.
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