Singapore’s central bank yesterday signaled that it would maintain measures to cool residential property prices for now in the absence of any signs of a market slump.
“We’ve not seen any impending risk of a sharp sell-off,” Monetary Authority of Singapore (MAS) Managing Director Ravi Menon said. “At this point I don’t see why there is a need to shift gears significantly in any way.”
The MAS is watching the market “very closely” following steps introduced last year to slow price increases, Menon said at a briefing on its annual report.
Home values have fallen in the wake of the measures, which included raising stamp duties for second homes and tightening loan-to-value limits for mortgages.
“We have learned from experience that preventing a bubble from forming is less painful than deflating one that has fully formed,” Menon said.
Dwelling values fell for a second straight quarter in the three months that ended on March 31, with luxury home prices down 2.9 percent, the most since the quarter that ended in June 2009.
Earlier this month, the government cut the supply of private residential units under its land sales program in a bid to curb a glut in unsold apartments.
Singaporean Minister of National Development Lawrence Wong (黃循財) said last month that Singapore has succeeded in avoiding a “destabilizing correction” in the residential property market.
“Genuine homeowners” understand the need for measures that curtail speculation, he said in an interview.
Menon also said that he expects growth of Singapore’s financial sector to slow from last year, although it would continue to outpace the economy’s expansion.
A net 6,900 jobs were created last year in the financial services and fintech sectors, exceeding a target of adding 4,000 jobs annually, the MAS said.
Separately, the MAS has held discussions with Facebook Inc about its plans for a new cryptocurrency, although the regulator still sees significant obstacles in the way of the social media firm’s project.
Despite the potential benefits of Libra, concerns raised about the way it would function are “not trivial,” Menon said.
“The key challenge is to figure out the nature of the beast,” Menon said. “What is it more like and which box we can put it into. At this point we are not sure yet.”
However, Menon also noted the potential benefits of Libra, which could provide a cheap payments system and help bring the unbanked into the mainstream financial system.
The current cross-border payments system is “expensive, inefficient, sometimes risky,” Menon said. “Libra offers a very interesting proposition that could help to address” those issues.
However, more information is needed to establish the potential advantages, Menon said, adding that there are many other experiments under way to address shortcomings in cross-border payments.
“At this point it’s not clear whether it offers a distinctly superior proposition to existing electronic payment mechanisms,” he said. “We need to understand how exactly it’s going to work,” including the economics of the project, as well as security and privacy issues.
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