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1MDB: Bank Negara To Uphold Areas Under Its Purview

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KUALA LUMPUR: Bank Negara Malaysia (BNM) will uphold areas under its purview and legislation that it operates in with regards to the audit and investigation being carried out on 1Malaysia Development Bhd (1MDB).

“As the central bank, we will uphold whatever that is under our purview under the legislation that we operate, and this is important. We are accountable for it,” BNM Governor Tan Sri Dr Zeti Akhtar Aziz said today.

She said this in an exclusive interview on CNBC when asked on the audit being carried out on the government-owned strategic development company.

Asked if she personally believed the audit outcome should be made public, she said: “I think (that is) the intention ….. everyone is waiting to see the outcome of the investigation that is taking place.”

On the possibility of Fitch Ratings downgrading Malaysia’s credit rating, among others, due to 1MDB’s debt obligation, the Governor said:“We have stress test on individual borrowers and individual institutions and the system as a whole and we can categorically say that our financial institutions may have their profitability affected but they remain sound and solid.

“They remain well capitalised above the minimum requirement. That much we can say.”

On interest rates, Zeti reiterated that Malaysia was maintaining them as it was still highly accommodative and supportive of growth.

“The demand for growth and investment growth is still very significant. Investment is growing at nine per cent and loans growth is something like 10 per cent. So, the demand is strong both ways, the household, as well as, private businesses,” she told CNBC anchor Martin Soong in the four minutes interview broadcast Monday morning.

In its recent monetary policy statement, the central bank kept the key interest rate unchanged at 3.25 per cent.

On other developments, Zeti said the current volatile environment was the reason the central bank liberalised to allow businesses to have foreign currency accounts of any limit for hedging purposes.

She said there was no restriction on the timeframe, as well as, the volume businesses can hedge to manage foreign exchange exposure against a volatile environment.

Asked if Malaysia was doing enough not to be trapped in the middle-income class, Zeti said: “Up to now perhaps not enough. But in the pipeline it is happening. Reforms in the area of education and health, that is being exquisitely pursued in the recent months.”

The Governor believed that Malaysia still has time to achieve its goal if the reforms were successfully implemented.

Asked for her plans after the central bank, the seventh and current governor said : “I probably write a book. Partly it will be the untold stories.” – BERNAMA


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