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Monograph on Supervisory Framework

The Monetary Authority of Singapore (the MAS) issued a monograph on its supervision of financial institutions on April 23 2007, which seeks to provide greater clarity and transparency of how the MAS assesses the risk of financial institutions and develops appropriate supervisory plans.

The monograph highlights that the aim of the MAS's risk-based supervision is to foster the safety and soundness of financial institutions and to promote transparency and fair dealing by financial institutions in relation to their customers and counterparties, contributing to the maintenance of a stable financial system.

Through an impact and risk model, the MAS varies and calibrates the supervisory attention paid to a financial institution according to its potential to affect the achievement of the MAS's supervisory objectives. In seeking to meet its supervisory objectives, the MAS does not aim to prevent all failure, but instead, aim to reduce the risk of failure.

The board and senior management play the central role for proactive oversight and governance of a financial institution's activities. The MAS looks to the board and senior management to address issues of supervisory concern and supports the institution's efforts to maintain an environment of sound risk management and internal processes commensurate with the institution's business activities and their risks.

The MAS, by bringing greater transparency to the supervisory process, hopes that financial institutions and other stakeholders will have a better understanding of their respective roles in the supervisory process and in achieving the desired outcomes.

The monograph is available on the MAS website (www.mas.gov.sg).

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