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

Author

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  • Kenneth S. Chan
  • Kee Jin Ngiam

Abstract

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.

Suggested Citation

  • Kenneth S. Chan & Kee Jin Ngiam, 1996. "Currency Speculation and the Optimum Control of Bank Lending in Singapore Dollar: A Case for Partial Liberalization," IMF Working Papers 1996/095, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1996/095
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    Cited by:

    1. Basant K. Kapur, 2007. "Capital Flows and Exchange Rate Volatility: Singapore's Experience," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 575-608, National Bureau of Economic Research, Inc.
    2. Peter Wilson, 2015. "Monetary Policy And Financial Sector Development," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(03), pages 1-25.

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