Published October 15, 2008
KL central bank moves to allay depositors' fears
Banks have negligible exposure to sub-prime and affected institutions
By S JAYASANKARAN IN KUALA LUMPUR
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IN a rare show of pro-activeness, the central bank or Bank Negara Malaysia (BNM) issued a statement yesterday aimed at calming fears among Malaysian depositors that the local banks could be convulsed by the global contagion sweeping in from the Western financial system.
The central bank addressed the contagion issue squarely. 'Malaysian financial institutions have negligible exposure to both sub-prime related securities and to the affected financial institutions of other countries with more than 90 per cent of the total assets of banks and insurance companies denominated in ringgit,' it noted in its statement.
Stressing that the banks were more resilient after the Asian financial crisis, BNM said that 'several years of reform, institutional development and capacity building and continuous efforts to enhance corporate governance and risk management standards and practices' had 'significantly strengthened' the banking system.
Stressing that liquidity remained ample, BNM said that the net interbank placements by the banks with the central bank amounted to RM198.5 billion (S$82.7 billion) at end-August 2008.
The pro-active stance adopted by the central bank illustrates its awareness of ordinary concerns. Indeed, some people are so anxious about Malaysia's banking system to the extent that the sale of safes in Kuala Lumpur has reportedly increased in the last month.
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Wednesday, 15 October 2008
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