Bank Negara Malaysia (BNM), through its Financial Stability and Payment Systems Report, said key challenges to financial stability in 2011 are likely to be largely externally driven, as global economic conditions remain fragile.
“Domestic growth will continue to be underpinned by strong economic fundamentals and further expansion in consumption and investment, although developments in commodity and energy prices will affect cost of living, particularly for average Malaysians living in urban areas,” said BNM, adding shifts in global liquidity will continue to pose challenges to the region, including Malaysia.
Financial asset prices and exchange rates remain susceptible to large and volatile portfolio inflows as well as the potential sharp reversals.
BNM’s pre-emptive measures taken to ensure that risk-taking behaviours by financial institutions continue to remain prudent and measures that aim to create greater financial awareness among households, as well as hedging activities of businesses to manage exchange rate fluctuations, will contribute towards mitigating these risks.
The central bank would also ensure sustainable household consumption and debt repayment capacity where emphasis will continue to be placed on inculcating responsible borrowing behaviours by raising the level of financial literacy as a means to promote sound financial and debt management.
This would in turn contain credit risk in the banking system within prudent levels and will also prevent excessive accumulation of debts by households outside the formal financial system.
BNM also intends to strengthen the risk capture and assessment on entities with systemic implications in the financial system while understanding and assessing the impact of changes in regulatory and accounting environment.
“This will include ongoing assessments of the impact to financial stability and behaviours of financial institutions from the enhanced capital and liquidity requirements under Basel III and changes to international financial reporting standards,” said BNM, adding law and prudential guidelines will also be reviewed to further strengthen its regulatory and supervisory framework.
BNM also plans to pursue cooperation with other supervisory authorities through established multi-lateral platforms and bilateral arrangements, in order to effectively identify and further strengthen its readiness to deal with emerging risks to financial stability. - Written by Sharon Tan of theedgemalaysia.com
No comments:
Post a Comment