Bank Negara Malaysia (BNM)

Established on January 26, 1959 under the Central Bank of Malaysia

Act 1958
!re"iously #aintained branches in each of the state ca!itals Most of
the# $ere closed in the 199%s $hen retail banks be&an takin& o"er
#ost of the counter ser"ices
still branches #aintained in 'enan&, Johor Bahru, (ota (inabalu,
(uchin&, (uala )eren&&anu and *hah Ala# Bank +e&ara also has
re!resentati"e offices in ,ondon and +e$ -ork
Objectives of Bank Negara Malaysia
. )o !ro#ote #onetary stability and a sound financial structure
. )o act as a banker and financial ad"iser to the /o"ern#ent
. )o issue currency and kee! reser"es safe&uardin& the "alue of the
currency
. )o influence the credit situation to the ad"anta&e of the country
0oles and res!onsibilities of Bank +e&ara Malaysia ha"e e"ol"ed
and e1!anded
)oday, Bank +e&ara Malaysia focuses on the three !illars of central
bankin&, na#ely #onetary stability, financial stability and the
!ay#ents syste#
2#!ortance is &i"en to the de"elo!#ental role of Bank +e&ara
Malaysia, in res!ect to econo#ic #ana&e#ent, institutional buildin&
and the de"elo!#ent of the financial syste#
Monetary stability refers to the stability of the "alue of the Malaysian
currency, the rin&&it
Ensure that the "alue of the rin&&it is !reser"ed is by ensurin& !rice
stability,
Ensure that inflation in the country re#ains lo$ and stable By #aintainin&
#onetary stability throu&h a!!ro!riate chan&es in #onetary !olicy, Bank
+e&ara Malaysia ensures that inflation is ke!t lo$ and that the !urchasin&
!o$er of the rin&&it is not di#inished
Why is monetary stability so important?
because $hen there is #onetary instability, !rices are either risin&
3inflation4 or fallin& 3deflation4 and this can result in distortions and
under#ine the lon&5ter# econo#ic &ro$th !ros!ects of the country
2f inflation is too hi&h, !eo!le $ill be concerned about the !urchasin&
!o$er of their #oney balances
)his $ould result in a &reater de#and for real assets like houses and
!ro!erties, $hich are thou&ht to be #ore 6inflation5!roof6
)here $ould be less interest to in"est in !roducti"e ca!acity of the
econo#y
*a"ers $ould be less inclined to hold sa"in&s in the financial syste#
if they e1!ect that the "alue of their sa"in&s $ould be di#inished
7i1ed inco#e earners $ill find that they are able to buy less &oods
and ser"ices and $ill e1!erience a reduction in their standard of
li"in&
8i&h inflation $ould also #ake e1!orts #ore e1!ensi"e to forei&ners
and this $ould reduce the co#!etiti"eness of the e1!orts
'ersistently hi&h inflation $ould therefore reduce the &ro$th !otential
of the econo#y