It was reported that our March inflation figures (measured year on year) was 5.2%. Part of this increase was attributed to a sharper increase in Certificate of Entitlement (COE) prices, which led to higher car prices.

We all know that a declining COE supply had led to a huge increase in the prices of COEs.

Surely there is a better way of improving the current COE system? This is one area that the government can tweak to reduce the cost of living in Singapore.

My friend Chan Tau Chou suggested implementing some kind of balloting system to control the distribution and prices of COEs.

His point that the average family’s expenditure on the COE could be diverted to more useful purposes is something very true.

Mr Chan’s letter drew a flurry of replies, including my own. Some of these ideas are worth considering:

COE Scheme should be fairer

Social cost of high COE prices

Have balloting and bidding for COEs

Create niche category for luxury cars

After reading through the different ideas, I think the most ideal way to tackle this problem is to have separate COE categories for balloting and bidding. A good analogy would be the way HDB units are sold (balloted) while the private condominiums are sold freely.

You can read about some of my other suggestions in my letter to the ST Forum (My letter is in the background story box), which I will not repeat here due to the exclusivity clause.

In a coordinated move yesterday, The European Central Bank, U.S. Federal Reserve, the Bank of England and the central banks of Canada, Japan and Switzerland announced that they would make it easier for European banks to gain access to US$ liquidity.

The central banks agreed to reduce the cost of temporary dollar loans they offer to banks — called liquidity swaps — by half a percentage point starting from next Monday.

Recently, European banks have been having trouble borrowing dollars at affordable rates due to fears about their financial health.

By having these liquidity swap agreements in place (this article gives a good explanation of how it works), The European Central Bank (ECB) will be able to get ready access to US$ to lend to European banks.

Equity markets worldwide rallied on the news. While this move solves an immediate liquidity problem, I think that the underlying solvency issues still remains intact.