KUALA LUMPUR – Malaysia's strong financial institutions, system and preparedness can safeguard its economy from falling into a crisis, according to Bank Negara Malaysia Deputy Governor Jessica Chew.
“We have the capacity to respond to the potential spike in infections much better than it was, say in March.
“(Hence), we are able to deal with the increase in infections in a much more targeted and much more focused manner and we believe that that will be the response going forward," she said during a virtual briefing for business editors, in conjunction with the release of the Financial Stability Review – First Half 2020, today.
Chew was asked if the central bank foresees a financial crisis in the near term following the spike in Covid-19 infections.
Today's local financial system allows the authorities to respond to this critical period and continue to support the economy, be it to businesses or households, she said, adding that policy measures would also be directed towards averting any crisis.
As of October 13, Malaysia reported 660 new Covid-19 cases, bringing the total to 16,880.
Unlike the Asian financial crisis (AFC) in 1997/98, Chew said the current banking system is substantially stronger with 18% capital ratio (AFC: 10%) and this is due to the stronger lending standard.
The Malaysian bond market is also much more developed compared to the AFC level, hence, the degree of concentration of economic dependence for funding on the banking system has reduced.
Asked if the ongoing political developments could affect the recent financial stability, Chew said the central bank, armed with its regulatory and supervisory policies, is managed independently devoid of any political development.
“We have a very clear mandate under the law as to what we are responsible for and what we can and we cannot do.
“We operate strictly within that remit. So, our assessment is really very much driven by ensuring that our financial intermediation is not disrupted, that payment and financial services to the public continue to proceed and that the financial market conditions are orderly,” she added. – Bernama, October 14, 2020
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