The collapse of the Singapore financial system
2022.11.25 00:25
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The collapse of the Singapore financial system
Budrigannews.com – The central bank of the city-state of Singapore stated on Friday that Singaporean households, businesses, and banks have experienced an increase in financial vulnerability this year, advising individuals to exercise caution when taking on additional mortgage debt.
The Monetary Authority of Singapore stated in its annual financial stability review that the unwinding of pandemic-related precautionary buffers was primarily to blame for the increased vulnerability.
Nonetheless, the national bank’s pressure test showed corporates and families were “versatile to macrofinancial shocks”, while banks stand firm areas of strength for on situations.
However, the central bank noted that mortgage loans should be taken with caution by households, particularly those with lower incomes, as financial conditions were anticipated to tighten further in the coming quarters.
According to the report, housing loans remained the primary factor contributing to the overall increase in household debt in the third quarter of 2022, which was 3.1% year-over-year.
The good news was that tighter regulations were implemented in December of last year, and as a result, the credit quality of housing loans had improved over the past year.
Only 30 units were foreclosed on this year, and loan-to-value ratios have dropped to 43% in the third quarter of 2022 from 54% in 2017.
The Monetary Authority of Singapore anticipates a sharp slowdown in global growth over the next year, with inflation likely remaining “significantly” above many central banks’ targets.
Singapore’s national bank said the gamble of expansion and loan costs staying higher for longer than recently expected will deteriorate the obligation trouble for weak families and organizations, putting more noteworthy weight on banks.
The central bank stated, “However, banks are better positioned than during the Global Financial Crisis to manage these credit risks and absorb losses.”
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