How MAS conducts its financial plan in Singapore? Central banking institutions round the world use financial plan to gear the local economy into a certain direction. Monetary policy helps a country to combat inflationary pressures and also increase growth throughout the market. Monetary policy is defined as the action of a central bank therefore, that determines the rate and growth of the money supply which in turn affects the interest rates. Many countries in the world, including United China and States, adopt mortgage loan policy where central banks increase or decrease rates of interest or change the quantity of minimum bank reserve requirement rate.
However, in the entire case of Singapore, its financial plan position differs from that of other major economies around the world. Before we discuss on the recent direction of monetary policy in Singapore, let’s look at how Singapore manages its monetary policy to get a better understanding. In simple terms, Singapore adopts an exchange rate policy rather than an interest rate policy.
This has been the case since 1981. The mainly objective of the policy is to maintain price stability and sustainable financial growth. Firstly, the value of SGD has to be measured against something. Instead of using one single money as a standard like what Hong Kong is doing, a basket is used by the MAS of currencies of our major trading partners. It is trade weighted such that the currencies of our larger trading partners’ bears more excess weight and constitute a more integral …Read More