Currency Speculation and the Optimum Control of Bank Lending in Singapore Dollar: A Case for Partial Liberalization

August 1, 1996

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Kenneth S. Chan, and Kee Jin Ngiam. Currency Speculation and the Optimum Control of Bank Lending in Singapore Dollar: A Case for Partial Liberalization, (USA: International Monetary Fund, 1996) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The Monetary Authority of Singapore (MAS) has a long-standing policy of controlling bank lending in Singapore dollars to nonresidents and to residents who use the funds outside Singapore. While the control may prevent the internationalization of the Singapore dollar and contain exchange rate volatility, it can hinder the deepening and widening of the financial markets in Singapore. This paper suggests three policy options that would allow traders and investors to borrow Singapore dollars without any restrictions, while making it costly for speculators since their activities can cause exchange rate volatility which arguably imposes external costs to society.

Subject: Bank credit, Banking, Currencies, Currency crises, Exchange rates, Financial crises, Financial institutions, Foreign exchange, Loans, Money

Keywords: Bank credit, Credit facilities, Currencies, Currency crises, Exchange rates, Global, Government-linked companies, Loan quota, Loans, Loans to speculator, MAS restriction, Money market, Quota rule, Singapore-dollar loan, Southeast Asia, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1996/095
Stock No:

WPIEA0951996
ISBN:

9781451950472
ISSN:

1018-5941

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