[SINGAPORE] Singapore will relax rules that currently require banks to segregate their domestic and international operations into separate accounting entities, as part of moves to simplify its banking regulations.
Banks in Singapore need to divide their local and offshore operations into domestic banking units (DBU) and Asian Currency Units (ACU). This division was created in the late 1960s to boost the growth of the Asian Dollar Market - in which US dollars and other foreign currencies were transacted - while safeguarding the local banking system.
"If we continue with the divide, it would merely impose undue administrative burden on banks, without materially enhancing prudential soundness or systemic stability," Tharman Shanmugaratnam, deputy prime minister and chairman of Singapore's central bank said at a banking event late on Tuesday.
The DBU of a bank holds its domestically-focused operations, which are predominantly denominated in Singapore dollars, while the ACU holds its offshore operations, which are entirely denominated in foreign currency.
Singapore is the third largest foreign exchange centre after London and New York. The Southeast Asian city-state has also emerged as a leading trade and financial centre, with more than 12,000 European and US companies having operations in Singapore, according to European Union and US data.
Mr Shanmugaratnam said enhanced global and domestic regulatory standards had reduced the relevance of the DBU-ACU divide.
The Monetary Authority of Singapore (MAS) will give details of the new regulations in a consultation paper by August.
"There is no rush. We will implement the changes in close consultation with the banking community, and phase them in over time," Mr Shanmugaratnam said at the annual event of the Association of Banks in Singapore, attended by about 700 industry executives.