Impact of Aging Population Monetary and Exchange Rate Management in Singapore
The Singapore Economic Review, Vol. 53, No. 2, pp. 245-259, 2008
Posted: 25 Apr 2010
Date Written: August 1, 2008
This policy note finds that the ageing of the population in Singapore will cause a reversal of the current net Central Provident Fund (CPF) contribution into a substantial net CPF withdrawal from 2025, with a peak occurring at 2035. The result is qualitatively robust to changes in the underlying assumptions of the projection. The paper then highlights the implications of this change on the exchange rate and monetary management in Singapore. Finally, the paper proposes policy measures that can help (a) mop up the excess liquidity due to the net CPF withdrawals; and (b) maintain the Monetary Authority of Singapore (MAS)'s influence on Singapore's exchange rate at a reasonable level in the longer future.
Keywords: Ageing population, Central Provident Fund, exchange rate system, monetary policy, Singapore
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