The Singapore regulator's chairman believes inflation will peak in the third quarter. In a speech, he also strongly defended crypto-related regulation.

The Monetary Authority of Singapore (MAS) chairman Ravi Menon believes that core inflation in the city-state will top out between 4-4.5 percent in the third quarter of 2022, after which it is expected to level off.

In a speech delivered during the MAS annual news conference Tuesday, he also staunchly defended crypto-regulation following the Three Arrows Capital, TerraForm, Luna, and Vauld debacles, all prominent victims of the market rout that many players are terming a «crypto winter».

Get Worse Before Getting Better

Menon indicated that core inflation will remain at levels that are «much higher» than what the city-state is used to and that it is expected to come in at 3-4 percent for the full year.

The wider inflation gauge including automobile prices and rent/property costs is expected to be 5-6 percent this year. After that, it is expected to ease in 2023 although it will remain «well above» the average 1.5 percent annual rate seen since 2000.

He noted that the Singapore economy was 6 percent larger than it was before the pandemic although total employment remained 2.5 percent below the levels seen then, mainly on the back of a 15 percent decline in the non-resident workforce since the end of 2019.

Crypto Firms Not Part of Regulatory Regime

Menon discussed the crisis in the crypto industry at length.

«Some crypto players that have come under strain have been reported by the media as being ‘Singapore-based’» Menon stated.

But he noted that TerraForm and Luna, which have now collapsed, were not licensed or regulated by the MAS and had not applied for a license or sought any exemptions from them in the city-state.

Three Arrows Capital, which finews.asia reported on at length, operated as a registered fund manager to carry out limited fund management business and was not regulated under the Payment Services Act, he indicated. According to him, it had ceased to manage funds in Singapore prior to its insolvency. By the same token, Vauld was not licensed by the MAS but it had applied for one, and that was currently being reviewed.

Firm Action

He believed that Singapore was considered to be at the forefront when it came to crypto regulation and he defended its clear licensing and regulatory framework although most of the focus until now had been on preventing money laundering and terrorist finance.

«MAS and relevant government agencies will take firm enforcement action if any entity is found to be conducting illegal activities or performing regulated activities without a licence,» Menon said.

He added that the regulatory framework for the crypto industry did not yet encompass consumer protection, market conduct, or reserve requirements for stablecoins, although that was now changing. He repeated previous MAS warnings related to the riskiness of investing in cryptocurrencies, particularly for retail investors, saying it would hold a seminar in August setting out the regulatory approach that is expected to be integral to the city-state's vision of being a digital asset hub in future.