UPHOLDING HIS OWN CENTRAL BANKER BRAND
Muhammad gives importance to transparency, accountability and fair play
TRANSPARENCY in financial stability policies is the way to go for Bank Negara Malaysia governor Datuk Muhammad Ibrahim and he eagerly looks forward to feedback from the public.
“When there’s a major policy, the public is invited to give comments, criticism and ideas. This is the way to go and we will continue with this practice,” said Muhammad at a media briefing recently.
Today is the first anniversary of Muhammad’s appointment as the governor of Bank Negara. He took over from Tan Sri Dr Zeti Akhtar Aziz, who held the position for 16 years.
Muhammad, 57, who has a Master’s degree from Harvard University, joined the bank in 1984.
Prior to his appointment as the governor, he had served in various departments ranging from international reserve management to money market, foreign exchange operations, banking supervision, insurance and offshore banking.
“Many things have happened in the past one year,” he said.
Bringing onboard his own brand as a central banker, Muhammad has since been instituting changes in a gradual manner.
For instance, he prefers to hold the Labuan Financial Services Authority annual report press briefing and board meetings here.
Media conferences at the bank are admittedly longer now as he patiently addresses every question.
Muhammad also prefers to get his senior management team to chair meetings on new measures and policies as he wants the public to get to know them.
“The job of a central banker is never ending”, said Muhammad. “There are always new action plans to handle, and there’s a constant need to ensure transparency in the work.”
Over the last three months, the corporate governance code was highlighted to emphasise transparency, accountability and fair play by banks and their board members.
It is due to this sense of independence that many research houses have high regard for the central bank.
There were two important things to be mindful of in order for the economy to move forward, he said.
“At any point of time, financial and monetary stability must be maintained. This is crucial for the development of the economy.”
The central bank is doing several things in great detail in terms of payment system, insurance and also Islamic finance.
With the input from the Financial Market Committee (FMC), Bank Negara has announced two measures to deepen the domestic bond market liquidity as well as broaden and deepen the onshore financial markets. This is to allow investors to better manage rates and foreign exchange exposures.
The initiative will take effect today.
The enhancement to financial market infrastructure, meanwhile, will be implemented on a gradual basis and is expected to be completed over 12 to 18 months.
Onshore foreign exchange market activities have increased since last December and there are improvements in the ringgit versus the US dollar levels.
“We expect the demand and supply of the ringgit to be more balanced than before. It will reflect the strong fundamentals that we have now,” said Muhammad.
The FMC, which was set up last year, comprises participants and representatives from the central bank, financial institutions corporations, financial services providers and other stakeholders.
On the international front, there have been several agreements inked with counterparts from Indonesia and the Philippines — as part of the Asean Integration Banking Framework.
“Trade and financial linkages would follow suit,” he explained.
“If we settle trade in the domestic currency, it will create more stability and businesses will have more options to choose the currency type and reduce the cost of doing business.”
Another area the central bank is focusing on now is the de-tariffing of insurance premiums to ensure those with good risk pay lower premiums while those with high risk pay more.
“It’s a major reform that affects our daily lives, but newspapers have not picked it up.”
He assured that the transition towards de-tariffing would be done in a gradual manner to avert any drastic change in premium adjustment.
From July 1, insurers can take into account the vehicle’s safety and security features, duration on the road, geographical location and traffic offences record to determine premiums.
When there’s a major policy, the public is invited to give comments, criticism and ideas. This is the way to go and we will continue with the practice.
Bank Negara Malaysia governor Datuk Muhammad Ibrahim has a master’s degree from Harvard University.
Research houses have high regard for Bank Negara Malaysia.