How is Bank Negara ensuring sufficient ringgit liquidity in Malaysia?

Question

Accepted Answer

Bank Negara Malaysia is actively managing ringgit liquidity through various monetary operations and market initiatives.

Bank Negara Malaysia (BNM) has reaffirmed its commitment to ensuring adequate ringgit liquidity within the onshore market. This commitment is being actively demonstrated through a combination of monetary policy tools and collaborative efforts with financial market participants. Recent actions have included adjustments to reserve requirements, repo operations, and direct purchases of government bonds, all aimed at maintaining a healthy flow of ringgit and supporting the bond market.
Monetary Operations to Ensure Liquidity

BNM has implemented several monetary operations to maintain sufficient ringgit liquidity. These include the utilisation of reverse repo operations, adjustments to the Statutory Reserve Requirement (SRR), and the provision of facilities for Principal Dealers. Furthermore, the central bank has engaged in the purchase of government bonds, all of which contribute to ensuring adequate liquidity in both the ringgit and bond markets. The recent increase in interbank repo market activities has also been noted as a positive development, enabling banks to manage their liquidity more effectively.
Collaborative Initiatives for Market Readiness

Beyond direct monetary interventions, BNM is fostering greater operational readiness for liquidity management among various financial entities. The Financial Markets Association Malaysia is set to collaborate with insurance and asset management associations, corporations, and other financial institutions. This collaboration will focus on enhancing preparedness for liquidity management, including the crucial step of ensuring that Global Master Repurchase Agreements (GMRA) are in place among market participants.
Expanding Repo Market Participation

Efforts are underway to broaden participation in the repo market, a key mechanism for managing short-term liquidity. BNM's Financial Markets Committee has discussed strategies to increase the number of participants in this market. A specific focus is being placed on encouraging active involvement from Development Financial Institutions (DFIs). Additionally, three designated banks will lead initiatives aimed at promoting participation in Sell and Buy Back Agreements, particularly within the Islamic finance sector.

Reading history

Hide →

This history is cleared when the page is closed.

How is Bank Negara ensuring sufficient ringgit liquidity in Malaysia?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends