The Ministry of Finance warned that Singapore will need to be “vigilant about the possibility of a property market bubble and take further measures where necessary”.Finance Minister Tharman Shanmugaratnam stated that the Monetary Authority of Singapore has “got a good handle” on the situation, and the government is “not fundamentally concerned” about “stability in the financial system”.
The US$600 billion programme is expected to push further capital into the region, in order to receive better yields. As a result, this might create problems for Singapore, which the country will have to address for some time, according to Shanmugaratnam.
He said: “The government will continue to monitor the situation closely, and take additional steps if necessary to ensure financial stability and sustainable asset markets. We are more concerned about property prices rising too quickly, too far, and our three rounds of measures so far have been aimed at injecting some stability in that process.”
According to Shanmugaratnam, the government’s intent is not to introduce capital controls, although certain policy tools will still be used to ensure that capital flows do not threaten financial stability or cause a property market bubble.
Major Policy tools that have been used so far include the tightening of monetary policy in October by the central bank and the adjustment of the exchange-rate band for the Sing dollar to allow steeper appreciation of the currency.
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