(22 June 2005 – Singapore) The International Advisory Panel to the Monetary Authority of Singapore has said the country must work more closely with its Asian neighbours to establish stronger and more liquid capital markets in the region.”The IAP noted that the continued growth of Asia would require deeper and more liquid capital markets,” the panel which is made up of international bankers, said.
“This was where the challenges were greatest and where Singapore’s small domestic market required it to look outward,” it said.
The IAP encouraged Singapore to help grow capital markets in the ASEAN region and continue to play a leading role in the integration of Asian financial markets.
The panel said there was still a heavy reliance on short term foreign currency loans and combined with illiquid debt markets, this was causing foreign capital to leave the region, thus undermining economic growth.
The IAP said a better solution would be to establish an over the counter derivatives clearing house in the region, which would lessen credit risk and consolidate Singapore’s position as an Asian hub for commodities trading.