mr funny
24-11-10, 00:33
http://www.straitstimes.com/Singapore/Story/STIStory_606229.html
Nov 23, 2010
parliament
Additional steps to cool property market, if necessary: Tharman
THE Government is keeping a close watch on the property and financial markets as the buoyant Singapore economy - along with others in Asia - becomes a magnet for money in search of good returns.
If necessary, additional steps will be taken to keep property prices from soaring, said Finance Minister Tharman Shanmugaratnam yesterday.
He also assured Singaporeans that there was no need to worry about the negative impact of these capital inflows because Singapore's financial markets can manage them efficiently.
In essence, the financial system here is able to take what is needed for domestic consumption and 'recycle' the excess liquidity back into foreign markets, he said.
Mr Tharman made these points in his reply to MPs worried about the impact of the new United States policy to spur its dormant economy. Those who raised their concern included Mr Liang Eng Hwa (Holland-Bukit Timah GRC) and Nominated MP Teo Siong Seng.
The US Federal Reserve said recently that it would inject US$600 billion (S$779 billion) into the economy by buying long-term US Treasury securities.
This round of quantitative easing has unsettled many developing countries, which say the capital flows into their economies are pushing up home and stock market prices.
Some analysts have warned that this 'hot money' is destabilising as it could create speculative bubbles reminiscent of those created in many Asian countries during the 1997 Asian financial crisis.
Mr Liang echoed these concerns and asked if Singapore should be worried about these liquidity inflows, as they could do an about-turn and flow out just as quickly.
But Mr Tharman noted that while much attention has been focused on this latest round of quantitative easing, the basic reason for the capital inflows is the difference in growth between the developed and developing countries.
Investors in low-interest-rate developed countries move their money overseas in search of better yields for their capital, he said.
'That's a problem we have to address for some time to come. It means that we have to be vigilant about property market bubbles and take further action where necessary,' said Mr Tharman.
Singapore's financial markets are also deep enough to deal efficiently with such flows, he added.
This is because the financial system has a way of 'intermediating these flows, so that what is not needed domestically tends to get recycled overseas', he said. 'Nevertheless, we are closely monitoring the impact of capital flows on the economy and especially our asset markets.'
Noting the volatility of these inflows, he said the Monetary Authority of Singapore had taken into account this volatility in global financial markets in its latest policy move last month, 'which involved a widening of the band in which the Singdollar exchange rate can fluctuate'.
�He ruled out introducing capital controls but said the Government will continue to rely on a range of tools to ensure the flows do not threaten financial stability or cause a property market bubble.
Citing a series of cooling measures in the property market, Mr Tharman said the Government will do more if necessary: 'The Government will continue to monitor the situation closely and take additional steps, if necessary, to ensure financial stability and sustainable asset markets.'
AARON LOW
Nov 23, 2010
parliament
Additional steps to cool property market, if necessary: Tharman
THE Government is keeping a close watch on the property and financial markets as the buoyant Singapore economy - along with others in Asia - becomes a magnet for money in search of good returns.
If necessary, additional steps will be taken to keep property prices from soaring, said Finance Minister Tharman Shanmugaratnam yesterday.
He also assured Singaporeans that there was no need to worry about the negative impact of these capital inflows because Singapore's financial markets can manage them efficiently.
In essence, the financial system here is able to take what is needed for domestic consumption and 'recycle' the excess liquidity back into foreign markets, he said.
Mr Tharman made these points in his reply to MPs worried about the impact of the new United States policy to spur its dormant economy. Those who raised their concern included Mr Liang Eng Hwa (Holland-Bukit Timah GRC) and Nominated MP Teo Siong Seng.
The US Federal Reserve said recently that it would inject US$600 billion (S$779 billion) into the economy by buying long-term US Treasury securities.
This round of quantitative easing has unsettled many developing countries, which say the capital flows into their economies are pushing up home and stock market prices.
Some analysts have warned that this 'hot money' is destabilising as it could create speculative bubbles reminiscent of those created in many Asian countries during the 1997 Asian financial crisis.
Mr Liang echoed these concerns and asked if Singapore should be worried about these liquidity inflows, as they could do an about-turn and flow out just as quickly.
But Mr Tharman noted that while much attention has been focused on this latest round of quantitative easing, the basic reason for the capital inflows is the difference in growth between the developed and developing countries.
Investors in low-interest-rate developed countries move their money overseas in search of better yields for their capital, he said.
'That's a problem we have to address for some time to come. It means that we have to be vigilant about property market bubbles and take further action where necessary,' said Mr Tharman.
Singapore's financial markets are also deep enough to deal efficiently with such flows, he added.
This is because the financial system has a way of 'intermediating these flows, so that what is not needed domestically tends to get recycled overseas', he said. 'Nevertheless, we are closely monitoring the impact of capital flows on the economy and especially our asset markets.'
Noting the volatility of these inflows, he said the Monetary Authority of Singapore had taken into account this volatility in global financial markets in its latest policy move last month, 'which involved a widening of the band in which the Singdollar exchange rate can fluctuate'.
�He ruled out introducing capital controls but said the Government will continue to rely on a range of tools to ensure the flows do not threaten financial stability or cause a property market bubble.
Citing a series of cooling measures in the property market, Mr Tharman said the Government will do more if necessary: 'The Government will continue to monitor the situation closely and take additional steps, if necessary, to ensure financial stability and sustainable asset markets.'
AARON LOW