Help us complete the puzzle

in every Indian language.

Learn more

Bank Negara Malaysia

From Wikipedia, the free encyclopedia

Central Bank of Malaysia

Bank Negara Malaysia (Malay)

The Central Bank of Malaysia headquarters in Kuala Lumpur.

Headquarters Kuala Lumpur, Malaysia

Established January 26, 1959

Governor Zeti Akhtar Aziz

Central bank of Malaysia

 Currency Malaysian ringgit

ISO 4217 Code MYR

Website bnm.gov.my

Bank Negara Malaysia or BNM is the Malaysian central bank. Established on January 26, 1959 as
the Central Bank of Malaya (Malay:Bank Negara Tanah Melayu), its main purpose was to issue currency, act
as banker and adviser to theGovernment of Malaysia and regulate the country's credit situation. Its
headquarters is located in Kuala Lumpur, the federal capital of Malaysia.

Contents
[hide]

• 1 History

○ 1.1 Pegging of the Ringgit and Reserves

• 2 Governors of Bank Negara

• 3 Headquarters and Branches

• 4 Powers of the bank

○ 4.1 Exchange Control Act 1953

○ 4.2 Central Bank of Malaysia Act 1958

○ 4.3 Central Bank of Malaysia Act 2009

○ 4.4 Islamic Banking Act 1983

○ 4.5 Banking and Financial Institutions Act 1989

○ 4.6 Takaful Act 1984

○ 4.7 Insurance Act 1996

○ 4.8 Money-Changing Act 1998

○ 4.9 Anti-Money Laundering and Anti-Terrorism

Financing Act 2001

○ 4.10 Development Financial Institutions Act 2002

○ 4.11 Payment Systems Act 2003

• 5 See also
 • 6 References

• 7 External links

[edit]History

In 1837 the Indian rupee was made the sole official currency in the Straits Settlements, but in 1867 silver
dollars were again legal tender. In 1903 the Straits dollar, pegged at two shillings and fourpence (2s. 4d.), was
introduced by the Board of Commissioners of Currency and private banks were prevented from issuing notes.
Since then continuity of the currency has been broken twice, once by the Japanese occupation 1942 - 1945,
and secondly by the devaluation of the Pound Sterling in 1967, when notes of the Board of Commissioners of
Currency of Malaya and British Borneo lost 15% of their value.

On June 12, 1967, the Malaysian dollar, issued by the new central bank, Bank Negara Malaysia, replaced
the Malaya and British Borneo dollar at par. The new currency retained all denominations of its predecessor
except the $10,000 denomination, and also brought over the colour schemes of the old dollar.

In 1985, following the "Plaza meeting" of G-5 finance ministers in New York City, the US dollar fell sharply
causing major losses in Bank Negara's dollar reserves. The bank responded by starting a program of
aggressive speculative trading to make up these losses (Millman, p. 226). Jaffar Hussein, the Bank Negara
Governor at the time, referred to this strategy as "honest-to-God trading" in a December 1988 speech in New
Delhi.

In the late 1980s, Bank Negara under Governor Jaffar Hussein, was a major player in the forex market. Its
activities caught the attention of many; initially, Asian markets came to realize the influence Bank Negara had
on the direction of forex market. Alan Greenspan acting theFederal Reserve chairman later realized Bank
Negara's massive speculation activities and requested the Malaysian central bank to stop it.

BNM sold between $500 million on September 21, 1990 - $1 billion worth of pound sterlings in a short period,
driving the pound down 4 cents on the dollar (Millman, p. 228). In response, bankers began front running Bank
Negara's orders. Two years later, Bank Negara attempted to defend the value of the British pound against
attempts by George Soros and others to devalue the pound sterling. George Soros won and Bank Negara
reportedly suffered losses of more than USD $4 billion. [1] Bank Negara lost an additional $2.2 billion in
speculative trading a year later (Millman, p. 229). By 1994, the bank became technically insolvent and was
bailed out by the Malaysian Finance Ministry (Millman, p. 229).

[edit]Pegging of the Ringgit and Reserves

In 1998, Bank Negara pegged 3.80 ringgit to a US dollar after the ringgit substantially depreciated during
the 1997 Asian financial crisis. In July 2005, the central bank abandoned fixed exchange rate regime in favor of
managed floating exchange rate system an hour after Chinafloated its own currency. This resulted in capital
flight of more than USD 10 billion, thought to be due to the repatriation of speculative funds that entered the
country in anticipation of the abandonment of the peg: - Bank Negara's foreign exchange reserves increased
by USD24 billion in the one year period between July 2004 and July 2005 (see table below). During this period
there was widespread believe that the ringgit was undervalued and that if the peg was removed, the ringgit
would appreciate.

Bank Negara Foreign Exchange Reserves (Source:

Bank Negara, rounded to the nearest billion USD)

31 July 2004 USD 54 billion

31 December 2004 USD 66 billion

31 July 2005 USD 78 billion

31 March 2007 USD 88 billion

31 July 2007 USD 99 billion

31 December 2007 USD 101 billion[1]

31 March 2008 USD 120 billion[2]

30 December 2008 USD 92 billion

Bank Negara continues to run negative interest rate differential to USD. The ringgit has appreciated gradually
since the peg was abandoned and as at 28 May 2007, it traded at around 3.40 to the US dollar. Malaysia's
foreign exchange reserves have increased steadily since the initial capital flight, and as at 31 March 2007 the
reserves stood at approximately USD88 billion, which is approximately USD10 billion more than the reserves
just prior to the peg being abandoned.

On 31 July 2007 the Malaysian reserves stood at approximately USD98.5 billion which is equivalent to
RM340.1 billion. The figure increase to USD 101.3 billion in 31 December 2007 which is equivalent to RM335.7
billion.[1] Bank Negara's international reserves increase further 15 days later to USD 104.3 billion or MYR 345.4
billion.[3][4]
[edit]Governors of Bank Negara

Governor Year

Tan Sri W H Wilcock January 1959 - July 1962

Ismail bin Mohamed Ali July 1962 - July 1980

Tan Sri Abdul Aziz bin Taha July 1980 - June 1985

Tan Sri Dato' Jaffar bin Hussein June 1985 - May 1994

Tan Sri Dato' Ahmad bin Mohd Don May 1994 - August 1998

Tan Sri Dato' Seri Ali Abul Hassan bin Sulaiman September 1998 - April 2000

Tan Sri Dato' Sri Dr. Zeti Akhtar Aziz May 2000 - Current

[edit]Headquarters and Branches

Bank Negara Malaysia.

The Bank Negara headquarters are located at Jalan Sultan Salahuddin; off Jalan Kuching. Bank Negara is
geographically located at latitude (3.1518 degrees) 3° 9' 6" North of the Equator and longitude (101.6926
degrees) 101° 41' 33" East of the Prime Meridian on the map of Kuala Lumpur.
Landmarks located near the Bank Negara building include Dataran Merdeka, St Mary's Cathedral,Kuala
Lumpur City Hall building, Kuala Lumpur Lake Gardens and the Tugu Negara.

Bank Negara had previously maintained branches in each of the state capitals. Most of them were closed in the
1990s when retail banks began taking over most of the counter services. There are still branches maintained
in Penang, Johor Bahru, Kota Kinabalu, Kuching, Kuala Terengganu andShah Alam. Some branches were
converted into a currency distribution and processing centres.

Bank Negara also retains representative offices in London and New York City, and a personnel training centre
in Petaling Jaya, Malaysia.

A new building named the Financial Services and Resources Center (FSRC) was constructed in 2004 to house
the FSRC, SEACEN, IFSB and the FMAG (museum arm of Bank Negara). Located along Jalan Dato Onn, in
front of the Tun Hussein Onn Memorial, the building was designed by renowned Malaysian architect firm, Hijjas
Kasturi Associates.

[edit]Powers of the bank

The bank is endowed with certain powers through establishment of legal Acts by the Parliament of Malaysia to
help fulfill its objectives. New legislation are created and current legislation is amended to reflect the needs of
the time and future.

[edit]Exchange Control Act 1953

Allows the bank to confer powers, and impose duties and restrictions in relation to gold, currency, payments,
securities, debts, and the import, export, transfer and settlement of property, and for purposes connected with
the matters aforesaid.[5]

[edit]Central Bank of Malaysia Act 1958

Provides the establishment, administration and powers of the bank.[5] This act has been repelled with Central
Bank of Malaysia Act 2009 starting on 25 November 2009.[6]

[edit]Central Bank of Malaysia Act 2009

Redefined the central bank roles which was not covered in the previous act. The central bank can now define
monetary policy autonomously through Monetary Policy Committee. The bank also now have greater regulatory
reach and oversight than before. The act also give recognition that conventional and Islamic Banking is running
in parallel in Malaysia.[6]

[edit]Islamic Banking Act 1983

Provides licensing and regulations of Islamic banking in Malaysia[5]

[edit]Banking and Financial Institutions Act 1989

Provides laws regarding licensing and regulation of banking institutions in Malaysia.[5]

[edit]Takaful Act 1984

Provides regulation for takaful business in Malaysia[5]

[edit]Insurance Act 1996

Provides licensing and regulations for insurance business and financial advisory business.[5]

[edit]Money-Changing Act 1998

Gives the bank the power to license and regulate money changing business in Malaysia.[5]

[edit]Anti-Money Laundering and Anti-Terrorism Financing Act 2001

This act is actually renamed from a previous act. The act provides powers to the bank to prevent money
laundering and terrorism financing.[5]

[edit]Development Financial Institutions Act 2002

Promotes the development of effective and efficient development financial institutions.[5]

[edit]Payment Systems Act 2003

Regulations of payment systems.[5]

[edit]See also
 Malaysian ringgit

 International Centre for Education in Islamic Finance

 Bank Negara Monetary Notes

[edit]References

1. ^ a b BNM Press Statements

2. ^ "International Reserves of BNM as at 31 March 2008". Bank Negara

Malaysia.

3. ^ International reserves at US$104bil

4. ^ Bank Negara reserves at RM345.4b

5. ^ a b c d e f g h i j "BNM Administered Legislation". Bank Negara Malaysia.

Retrieved 2008-07-28.

6. ^ a b "Bank Negara Malaysia". "Central Bank of Malaysia Act 2009 Comes into
Force Today". "Bank Negara Malaysia".
  Gregory J. Millman, Around the World on a Trillion Dollars a Day, Bantam
Press, London and New York, 1995.
[edit]External links
 (Malay) (English) Bank Negara Malaysia official site

 Islamic Banking Law

[show]v · d · eCentral banks

Categories: Central banks | Economy of Malaysia | Banks of Malaysia | Agencies of the Malaysian
government | Banks established in 1959

• Log in / create account

• Article
• Discussion
• Read
• Edit
• View history
Top of Form

Bottom of Form
• Main page
• Contents
• Featured content
• Current events
• Random article
• Donate to Wikipedia
Interaction
• Help
• About Wikipedia
• Community portal
• Recent changes
• Contact Wikipedia
Toolbox
Print/export
Languages
• Deutsch
• Français
• Bahasa Indonesia
• Bahasa Melayu
• Norsk (bokmål)
• 吴语
• 中文

• This page was last modified on 9 January 2011 at 16:50.

 • Text is available under the Creative Commons Attribution-ShareAlike License; additional

terms may apply. See Terms of Use for details.

Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit
organization.
• Contact us

• Privacy policy

• About Wikipedia

• Disclaimers

Extended Definition: Bank Negara Malaysia

Bank Negara Malaysia

Central Bank of Malaysia

Bank Negara Malaysia (Malay)
 The Central Bank of Malaysia headquarters in Kuala Lumpur.
Headquarters Kuala Lumpur, Malaysia
Established January 26, 1959
Governor Zeti Akhtar Aziz
Central Bank of Malaysia
Currency Malaysian ringgit
ISO 4217 Code MYR
Website bnm.gov.my

Bank Negara Malaysia or BNM is the Malaysian central bank. Its headquarters is
located in Kuala Lumpur, the capital of Malaysia, and was established on January 26,
1959 (as the Central Bank of Malaya or Bank Negara Tanah Melayu) to issue
currency, act as banker and adviser to the Government and influence the country's
credit situation.
Governors
Since its inception there have been seven governors.
Governor Year
Tan Sri W H Wilcock January 1959 - July 1962
Tun Ismail bin Mohamed Ali July 1962 - July 1980
Tan Sri Abdul Aziz bin Taha July 1980 - June 1985
Tan Sri Dato' Jaffar bin Hussein June 1985 - May 1994
Tan Sri Dato' Ahmad bin Mohd Don May 1994 - August 1998
September 1998 - April
Tan Sri Dato' Seri Ali Abul Hassan bin Sulaiman
2000
Tan Sri Dato' Sri Dr. Zeti Akhtar Aziz May 2000 - Current

Recent history
In 1985, following the "Plaza meeting" of G-5 finance ministers in New York City,
the US dollar fell sharply causing major losses in Bank Negara's dollar reserves. The
bank responded by starting a program of aggressive speculative trading to make up
these losses (Millman, p. 226). Jaffar Hussein, the Bank Negara Governor at the time,
referred to this strategy as "honest-to-God trading" in a December 1988 speech in
New Delhi.
In the late 1980s, Bank Negara under Governor Jaffar Hussein, was a major player in
the forex market. Its activities caught the attention of many; initially, Asian markets
came to realize the influence Bank Negara had on the direction of forex market. Alan
Greenspan acting the Federal Reserve chairman later realized Bank Negara's massive
speculation activities and requested the Malaysian central bank to stop it.
BNM sold between $500 million on September 21, 1990 - $1 billion worth of pound
sterlings in a short period, driving the pound down 4 cents on the dollar (Millman, p.
228). In response, bankers began front running Bank Negara's orders. Two years later,
Bank Negara attempted to defend the value of the British pound against attempts by
George Soros and others to devalue the pound sterling. George Soros won and Bank
Negara reportedly suffered losses of more than USD $4 billion. [1] Bank Negara lost
an additional $2.2 billion in speculative trading a year later (Millman, p. 229). By
1994, the bank became technically insolvent and was bailed out by the Malaysian
Finance Ministry (Millman, p. 229).
In 1998, Bank Negara pegged 3.80 ringgit to a US dollar after the ringgit substantially
depreciated during the 1997 Asian financial crisis. In July 2005, the central bank
abandoned fixed exchange rate regime in favor of managed floating exchange rate
system an hour after China floated its own currency. This resulted in capital flight of
more than USD 10 billion, thought to be due to the repatriation of speculative funds
that entered the country in anticipation of the abandonment of the peg: - Bank
Negara's foreign exchange reserves increased by USD24 billion in the one year period
between July 2004 and July 2005 (see table below). During this period there was
widespread believe that the ringgit was undervalued and that if the peg was removed,
the ringgit would appreciate.
Bank Negara Foreign Exchange Reserves (Source: Bank Negara, rounded to the nearest billion
USD)
31 July 2004 USD 54 billion
31 December 2004 USD 66 billion
31 July 2005 USD 78 billion
31 March 2007 USD 88 billion
31 July 2007 USD 99 billion
31 December 2007 USD 101 billion[1]
31 March 2008 USD 120 billion[2]
Bank Negara continues to run negative interest rate differential to USD. The ringgit
has appreciated gradually since the peg was abandoned and as at 28 May 2007, it
traded at around 3.40 to the US dollar. Malaysia's foreign exchange reserves have
increased steadily since the initial capital flight, and as at 31 March 2007 the reserves
stood at approximately USD88 billion, which is approximately USD10 billion more
than the reserves just prior to the peg being abandoned.
On 31 July 2007 the Malaysian reserves stood at approximately USD98.5 billion
which is equivalent to RM340.1 billion. The figure increase to USD 101.3 billion in
31 December 2007 which is equivalent to RM335.7 billion[1]. Bank Negara's
international reserves increase further 15 days later to USD 104.3 billion or MYR
345.4 billion[3][4].
Locations
Bank Negara's headquarters is located at Jalan Dato' Onn in Kuala Lumpur. A KTM
Komuter station with the same name is located next door. An overhead crossing over
Jalan Kuching and the Gombak River allows pedestrians access to the Bandaraya LRT
station and the rest of downtown Kuala Lumpur.
Bank Negara had previously maintained branches in each of the country's state
capitals. Most of them were closed in the 1990s when retail banks began taking over
most of the counter services. There are still branches in Penang, Johor Bahru, Kota
Kinabalu, Kuching and Kuala Terengganu, while the Shah Alam branch was
converted into a currency distribution and processing centre. Bank Negara also retains
representative offices in London and New York City, and a personnel training centre
in Petaling Jaya, Malaysia.
Banking & Finance - Bank Negara Malaysia

Bank Negara Malaysia

Bank Negara Malaysia (Central Bank of Malaysia) was established in January 1959, in line with the
Banking Ordinance 1958 (revised to the Central Bank of Malaysia Act in 1994). Its main function is to
supervise and regulate banking and related activities in Malaysia. Bank Negara Malaysia also helps to
develop the institutions and infrastructure that are the foundations of a modern and solid financial system.
Objectives of Bank Negara Malaysia
To ensure monetary stability and a stable financial structure
Bank Negara Malaysia holds the responsibility of ensuring monetary stability and promoting a durable
financial structure in the country. Price stability is an important factor in ensuring monetary stability in any
country, and towards this end, the inflation rate must be kept in check and the ringgit's purchasing power
kept at a steady level. Bank Negara Malaysia employs a variety of tools to manage monetary stability,
including open market operations, direct intervention and usage of the statutory reserve requirement
(SRR).
To function as the Government's banker and financial adviser
One of the most important functions of Bank Negara Malaysia is advising the Government on finance-
related matters. It dispenses policy advice to the Government on the state of its loan programmes,
particularly the terms and conditions of specific loan agreements. Bank Negara Malaysia also delivers a
twice-yearly report to the Finance Minister detailing the state of the economy, and requisite
recommendations on how best to meet future developments. The management of government securities
is also handled by Bank Negara Malaysia through its trading and settlement system.
To be the sole authority issuing currency in the country and to maintain appropriate currency
reserves
A specific chapter of the Banking Ordinance 1958 allows for Bank Negara Malaysia to be the sole issuer
of currency in the country. Bank Negara Malaysia is authorised to issue all legal tender currency for use in
the country. It also plays an important role in maintaining the proper amount of currency reserves for the
country, kept in the form of gold and foreign currency assets. It ensures that the Malaysian ringgit has the
necessary gold and foreign exchange backing.
To affect the general credit situation so as to benefit the country's economy
Bank Negara Malaysia must ensure that the general money supply and credit volume have the
appropriate "elasticity" to meet the demands of the domestic economy, while not making unjustified
demands on the country's resources at the same time. To this end, essential financial resources and
apparatuses must be wisely managed so as to maximise benefits to the country's banking system. Bank
Negara Malaysia also makes certain that local financial institutions adopt applicable policies and practices
that make them more sustainable in the face of international competition.