Shadow Banking in Singapore

Abstract

Shadow banking is a phenomenon of global concern because it entails risks for financial stability that need to be adequately addressed by regulation. Easier said than done, one could object, because it is a tricky task for regulators to respond appropriately. Singapore, one of the largest financial centres in Asia and the world, is a hub for financial intermediaries that are considered shadow banks. Data transmitted by Singapore to the Financial Stability Board provides the basis for this analysis of the relevance of shadow banks and risk-containing regulation applicable to them - the first of its kind for Singapore. In line with global efforts to curb risks for financial stability while avoiding excessive limitations on useful financial services, the article points out areas in which particular vigilance is indicated and suggests changes to existing regulation.