The Singapore Dollar or SGD is considered to be one of the most stable currencies in the world. In the country, the notes and coins are issued by MAS or Monetary Authority of Singapore. This came about in 2002 when the body took over this role from the merger with Singapore’s Board of Commissioners of Currency. Besides issuing the notes and coins of Singapore, MAS is the crucial authority of the currency and financial policies of Singapore.
Currency in Singapore
The notes and coins in Singapore issued by MAS are regarded as legal tender as they are backed by its assets while issuing any other numismatic notes and coins for special events. As such, MAS will work very closely with all the parties involved like banks, appointed contractors and security couriers in order of the efficient distribution of the currency of Singapore.
The Singapore dollar uses the dollar sign $ while it is often known as SGD. In terms of presence in the currency market, it has been among the most traded in the world based on value. In 2016, it was ranked as 12th. According to the Autoriti Monetari Brunei Darussalam or Monetary Authority of Brunei Darussalam, the Singapore currency is accepted in that country as well and vice-versa.
Background of the Singapore currency
Singapore used the Straits Dollar back in 1845 which went on until 1939 before changing to using the Malayan dollar and then to the Malaya and British Borneo dollar. The common currency was continued to be in use when it joined Malaysia in 1963 which only went on for 2 years. In 1965, Singapore broke away from Malaysia and then the Board of Commissioners of Currency, Singapore was established. The first coins and notes were then issued in April 1967.
Value of Singapore Dollar
When Singapore first issued its currency, it was very much the same as the Malaysian ringgit. In fact, until 1973, both the currencies were exchangeable at par. After that, the only currency that practiced this was the Brunei dollar until present day. In the early days, the Singapore dollar was pegged against the British pound sterling. This was set at SGD60 to 7 British Pound. Until the end of the Sterling Area in the early 1970s, the peg was then removed with which the Singapore dollar was then pegged to the US dollar. Between 1973 and 1985, the Singapore economy grew by leaps and bounds and the government decided to peg the currency with a basket of currencies (undisclosed trade-weighted).
There were a few government departments and agencies that were involved in the monetary functions usually handled by a central bank before 1970. As the economy grew and demands become more complex, the need for a more efficient policy on monetary matters become more vital. That was when the Monetary Authority of Singapore Act was passed in 1970 that saw the establishing of MAS in January a year later. This means that MAS becomes the rightful regulator when it comes to monetary, banking and financial aspects of the country.
After 1985, the Singapore dollar was allowed to float with close monitory by MAS against a basket of currencies as the country started to move towards a more market-oriented exchange system. This was known as the Monitoring Band which effectively allowed the government to ensure that exports are competitive and remained so while imported inflation can be better controlled.
Circulation of Currency
The total currency in circulation was valued at SGD29.1 billion, a figure reported in 2012. To ensure that the currency remains stable and public confidence is maintained, the circulation are backed by external assets like gold and silver, bank balances and money at call, Treasury Bills, securities and other factors. The second reading of the Monetary Authority of Singapore Bill 2017 was passed in 2017 where the Currency Fund was merged with MAS’ other funds. This is because MAS’s assets have been reported to be up to 7 times larger than the Currency Fund, making it the prefect platform to guarantee the value of the Singapore currency. According to MAS, the foreign reserves of Singapore as at April 2017 stood at more than USD 260.7 billion.