PUTRAJAYA - Bank Negara Malaysia (BNM) has given its assurance that no individual entity's debt will systemically affect the overall financial system and the economy of the country.
"We have arrangements to deal with it, so that no individual entity is going to have systemic implications on the overall financial system and on our economy. That's the basic principle that will prevail," BNM Governor Tan Sri Dr Zeti Akhtar Aziz told reporters after the signing ceremony between the Malaysian government and the World Bank Group to establish a knowledge and research office in Kuala Lumpur yesterday.
Replying to questions on 1Malaysia Development bhd, she said the central bank does not comment on individual entities.
"In the case of any extension being provided, that is not by BNM, it is by the lenders who are the commercial banks. They make those decisions," added Zeti, referring to the extensions of 1MDB's debt until end-January despite 1MDB missing the repayment of its RM2 billion loan twice that was originally due in end-November.
Meanwhile, she said the European Central Bank's (ECB) quantitative easing (QE) will have a positive impact if it provides stability to global financial markets and supports the recovery, growth and development in Europe.
"We've already experienced QE from the US. Most of us (emerging markets) demonstrated that our financial system has reached a maturity whereby we can ride out that kind of experience. I believe that in this case, we'll do the same."
On the ringgit hitting a six-year low, Zeti said: "We've seen these levels before. This reflects the events that are unfolding in the global environment and we believe it doesn't reflect our strong underline fundamentals. We believe when these events settle down and stabilise, the ringgit will trend towards reflecting our underline fundamentals."
Earlier, the government of Malaysia and the World Bank Group signed an agreement to establish a knowledge and research office in Kuala Lumpur.
The office will combine both operational expertise and research. It will facilitate the sharing of Malaysia's successful development experiences with countries around the world. It will also allow Malaysia to further leverage global knowledge and expertise from the World Bank.
Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah said Malaysia has achieved significant progress in reducing poverty, creating a business friendly environment, developing SMEs, ensuring financial stability and promoting Islamic finance, which will be some of the areas for knowledge sharing.
The office will also undertake research in key development areas as well as global indicators for the World Bank Doing Business report.
The World Bank Group office in Malaysia will be housed in Sasana Kijang, BNM's centre of excellence in knowledge and learning in central banking and financial services.
Full article: http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=449502:zeti-on-1mdb-missing-repayment-no-single-entitys-debt-will-affect-system&Itemid=3#ixzz3Q4MIaY4n
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