Currency Speculation and the Optimum Control of Bank Lending in Singapore Dollar: A Case for Partial Liberalisation

The monetary Authority of Singapore (MAS) has a policy of controlling bank lending in Singapore dollars to non-residents and residents outside Singapore. One of the objectives of this MAS policy is to discourage speculation against the Singapore dollar in times of currency crisis. The present paper reviews and suggests improvement of this MAS policy with other tax schemes in the literature such as the Tobin Tax, the Spahn Tax and the Eichengreen Tax in the market for foreign exchange.