5. Monetary, ﬁnancial and ﬁscal aspects In this chapter we overview the nature of the monetary system and make a suggestion and a conjecture about the nature of money in the future in Singapore. The ﬁnancial system has become an important part of the economy and its development and reform is a major current concern of the government. This is particularly true of the domestic banking system which has suﬀered from being protected from competition for many years. Singapore’s ﬁscal system has a number of characteristics that are featured uncritically in appraisals of its economic polices: persistent budget surpluses, leading to large reserves accumulation which are uncritically accepted as a good thing; very conservative spending policies; a very limited social welfare system; low tax rates on incomes and proﬁts, although as we have seen in Section 2.5 the view that Singapore is a low tax country is disputed by some tax experts. We examine the ﬁscal system and its contribution to growth and some of its possible future changes. 5.1 SINGAPORE’S MONETARY SYSTEM The Singapore dollar came into existence only in June 1967, nearly two years after separation from Malaysia, under the Currency Act of that year. As a British colony Singapore was part of the Straits Settlements and Malay States since 1938 so its currency was issued by the Board of Commissioners of Currency, Malaya. In April 1967 the Board of Commissioners of Currency, Singapore (BCCS) was established with the sole currency-issuing power in Singapore. After 1967...
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