CENTRAL BANK OF MALAYSIA ACT 2009 COMES INTO FORCE

KUALA LUMPUR, Nov 25 (Bernama) -- The Central Bank of Malaysia Act 2009
comes into force Wednesday, providing greater clarity on Bank Negara Malaysia's
(Central Bank of Malaysia) mandate and the necessary powers and instruments to
achieve it.

In a statement, Central Bank of Malaysia said with the new development, the
old Central
Bank of Malaysia Act 1958 is repealed and thus, ceased to apply.

It added that the new Act will enable it to more effectively manage emerging
risks and challenges in performing its role and responsibilities as the nation's
central bank.

Incorporated in the Act is a more robust governance framework that provides
for a high degree of accountability and transparency, the bank said.

"It institutionalises the good practices that have been put in place over
the recent decade which have proven to be important in enhancing the functioning
and effectiveness of Bank Negara (Central Bank)," it said.

Central Bank of Malaysia's main aim is to promote monetary and financial
stability conducive to the sustainable growth of the Malaysian economy.

The monetary policy aims to maintain price stability while giving due regard
to developments in the economy.

The Act stipulates that monetary policy is to be autonomously formulated by
the Monetary Policy Committee and effectively implemented by Bank Negara, the
central bank said.

Adequate safeguards have been incorporated in the Act with respect to the
membership of the committee, the decision-making framework and requirements for
transparency, disclosure and accountability, it said.

According to Central Bank, the more integrated and globalised economic and
financial environment have presented new challenges for its role in preserving
financial stability.

"In the preparation of this new Act, lessons were extensively drawn from the
recent global financial crises in financial regulation, surveillance and crisis
management framework and the need for effective coordination not only across
sectors but also across borders," it said.

Specific powers for macro-prudential financial stability, which to-date, has
not been a common feature of traditional central banking legislation, have now
been included in the Act, Central Bank said.

These provisions, among others, support increased surveillance, regulatory
reach, oversight of money and foreign exchange markets and coordination with
other regulators, including across borders, on crisis prevention, management and
resolution, it said.

Consistent with the goal to promote Malaysia as an international centre for
Islamic finance, the Act gives due recognition to the Islamic financial system
in Malaysia, it said.

The Act also provides for an enhanced role of the Syariah Advisory Council
on Islamic Finance to facilitate consistent application of Islamic law on
Islamic financial matters, it said.

According to the central bank, the role and responsibility of Central Bank
and the impact its policies and actions on the economy and financial system
necessitates a highly robust governance framework.

"The role of the board is enhanced in the new legislation. The board will
continue to have oversight of the management of Central Bank and will review its
performance," it said.

The Board Governance Committee, the Board Audit Committee and the Board Risk
Committee have been established to assist the board in this oversight
responsibility, it added.

It also said that the Act will provide a strong legal foundation
for it to effectively discharge its role and responsibilities in addressing the
current and future challenges towards achieving monetary and financial
stability.

This, it said, is for the overall development of the financial system that
supports sustainable economic advancement.

-- BERNAMA