Differences between the Monetary Authority of Singapore and the Ministry of Finance

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Everyone must have heard of the Monetary Authority of Singapore (MAS) and the Ministry of Finance (MOF) in Singapore. They are two key entities in the local financial scene and greatly impact everyone living in Singapore. But do people really understand what these two entities do and how they differ?

Here’s what these two entities do.

What The MAS Does?

Chaired by Deputy Prime Minister and Coordinating Minister for Economic and Social Policies, Tharman Shanmugaratnam, MAS manages over US$244 billion in foreign reserves as at February 2016. Mr Heng Swee Keat is also a Board Member.

But what does this mean for us?

MAS is Singapore’s central bank. As such, it takes care of Singapore’s monetary policy. This includes considerations of our interest rates and exchange rates. Do note that in Singapore, MAS overlooks exchange rates gives up control of interest rates (based on the impossible trinity).

MAS allows the Singapore dollar to fluctuate against an undisclosed basket of currencies from the nation’s trading partners and competitors. The basket is being reviewed periodically.

In addition, it also supervises the financial sector, provides liquidity, builds trust within the financial system, and supports Singapore’s vision in becoming a financial centre, It also aims to promote financial literacy in Singapore.

The MAS also has many significant programmes in Singapore that aims to promote financial literacy including chairing MoneySense, a national financial education programme.

What The MOF Does?

The MOF controls Singapore’s fiscal policies including planning government spending and collection of tax and duty revenues. Mr Heng Swee Keat, Singapore’s Finance Minister, leads the MOF.

Singapore is one of the richest countries in the world, and the MOF plays a big part in its fiscal prudence and shrewdness. With the upcoming Budget 2016 to be announced on 24 March 2016, it is important to note that the MOF plans and executes the Singapore budget.

Singapore’s reserves are managed by the MOF and distributed to three entities – MAS, GIC and Temasek.

As discussed above, MAS manages Singapore’s foreign reserves. GIC and Temasek are fund management entities with the objective of achieving long-term returns to Singapore’s assets.

Note that CPF monies are also distributed to GIC and MAS for investments.

MOF also supervises company laws, accounting standards and corporate governance principles to establish Singapore as a recognised international business and finance centre.

Summary

The MOF and MAS have to work hand-in-hand in many situations to ensure that Singapore remains at the forefront of international financial centres and creates a conducive and trustworthy environment for international businesses.

They also have objectives that encompassing social issues surrounding social progress and financial literacy respectively.


DollarsAndSense.sg is a website that provides bite-sized and relevant articles to help Singaporeans make better financial decisions.

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Publication Date: 
Thursday, March 24, 2016 – 06:30
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