Liberalisation of the Financial Sector

 

The liberalisation measures announced today aims to strengthen Malaysia ’s economic interlinkages with other economies and enhancing the role of the financial sector as a key enabler and catalyst of economic growth. These liberalisation measures are consistent with the objectives committed under the Financial Sector Master Plan (FSMP) issued in 2001 to develop a resilient, diversified and efficient financial sector. More than 90% of the FSMP initiatives have been completed or are being implemented on an ongoing basis. 

The financial reforms and capacity building efforts taken over the years have yielded positive results. Notable improvements have been achieved by the domestic financial institutions. Domestic banks today are well capitalised with risk-weighted capital ratio (RWCR) of 12.5% and an average asset size of RM91.6 billion. Domestic banks are also more resilient with strengthened corporate governance, efficient internal structures, robust risk management practices and diversified sources of income. The strengthened capacity has enabled domestic banks to venture abroad and reap benefits from new business opportunities. Despite the increasingly challenging environment, domestic banks have managed to maintain market share of above 70%.

Yen Advances to Six-Week High as Swine Flu Spurs Safety Demand

The yen advanced to a six-week high against the euro on speculation the spreading swine flu outbreak will increase demand for assets perceived as safer.

Japan’s currency also rose to a four-week high versus the dollar as the World Health Organization raised its pandemic alert to an unprecedented level, fueling concern the virus will deepen the global recession. Singapore’s dollar fell a second day on speculation the flu outbreak will curb tourism. The euro approached a one-week low against the pound as the European Central Bank may start buying bonds to hold down borrowing costs.

“The spread of swine flu has sparked concern over global risk and strengthened risk aversion,” said Yousuke Hosokawa, a senior currency dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest publicly traded bank. “Thus demand for the yen as a refuge will increase.”

The yen advanced to 125.58 per euro as of 10:40 a.m. in Tokyo, from 126.14 in New York yesterday. It earlier rose to 125.32, the strongest since March 12. The yen climbed to 96.50 per dollar from 96.77, after reaching 96.28, the highest level since March 30. The dollar traded at $1.3016 versus the euro from $1.3036. The euro bought 89.16 pence from 88.94 pence yesterday.