Publication Type

Book Chapter

Version

submittedVersion

Publication Date

9-2017

Abstract

Singapore has an unusual exchange rate-centered monetary policy framework that has served the economy well over the past decades. Monetary policy operations are carried out by the central bank through the management of the Singapore dollar against a currency basket. As is well recognized, such foreign exchange interventions do have an impact on domestic liquidity conditions. However, in the case of Singapore, this tends to be counteracted by the liquidity impact of public sector operations related to the fiscal position and the national pension scheme. The central bank takes into account the net liquidity impact these and other autonomous money market factors as well as banks’ demand for funds when performing money market operations to regulate the amount of domestic liquidity in the financial system. We conclude with an explanation on the negligible liquidity impact of currency in circulation as reflecting Singapore’s gradual transformation towards a cashless society.

Keywords

Currency management, Domestic liquidity, Cash in circulation, Financial technology

Discipline

Econometrics | Economic Policy

Research Areas

Econometrics

Publication

Cash in East Asia

Volume

44

Editor

Frank Rövekamp; Moritz Bälz; Hanns Günther Hilpert;

First Page

65

Last Page

76

ISBN

9783319598451

Identifier

10.1007/978-3-319-59846-8_5

Publisher

Springer

Copyright Owner and License

Publisher

Additional URL

https://doi.org/10.1007/978-3-319-59846-8_5

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