2014年-IMF国际货币组织全球_Malaysia_Financial_Sector_Assessment_Program_Monetary_Liquidity_Frameworks_20页_666kb

Summary of Malaysia's Monetary and Liquidity Frameworks (Technical Note, February 2013)

Core Content

This technical note provides an analysis of Malaysia's monetary and liquidity frameworks, focusing on the role of the Bank Negara Malaysia (BNM) in maintaining financial stability and managing liquidity conditions during both tranquil and crisis periods. It outlines the structural liquidity position, the operational framework of monetary policy, and the emergency lending assistance (ELA) mechanisms. Additionally, it discusses the challenges posed by capital flows and how the BNM has managed them.

Main Points

Monetary and Liquidity Frameworks

• Structural Liquidity:

  • The financial system in Malaysia holds a large amount of excess liquidity, estimated at 350 billion ringgit, along with 40 billion ringgit in government securities, representing 20% of total banking assets.
  • Banks rely heavily on deposits (72% of liabilities) for liquidity, which are categorized into demand, fixed, and savings deposits (68%), STMM deposits (22%), and certificates of deposit and foreign currency deposits (5% each).
  • The interbank market is the primary tool for managing daily liquidity fluctuations, though its role in redistributing term liquidity is limited due to the excess liquidity in the system.
  • In 2007, the repo market in Malaysia was replaced by stricter legal frameworks, leading to its near disappearance. Non-financial firms shifted to other STMM instruments.

• Monetary Policy Operational Framework:

  • Since 2004, the BNM has used a corridor system with the overnight interbank rate as the target policy rate.
  • The corridor was initially a floor system (25 bps), but in 2010, it was expanded to 50 bps by moving the auction of overnight OMOs earlier in the day.
  • The statutory reserve requirement is set at 4% of eligible liabilities, with a 20% variation band.
  • The BNM uses a variety of instruments for OMOs, including repos, foreign exchange swaps, and BNM bills, with a focus on liquidity-draining operations due to excess liquidity.
  • Collateral rules for standing facilities have been expanded to include both sovereign and private securities, with a 2% margin for non-ringgit-denominated assets.

• Supervisory Liquidity Framework:

  • All banks must follow the BNM Liquidity Framework and report their liquidity positions monthly.
  • The framework assesses liquidity sufficiency, shock resistance, and dependence on volatile markets.
  • Liquid assets (MGS, GII, BNM liabilities) account for about 22% of total assets for commercial and Islamic banks, with a stable range between 22% and 26%.
  • Domestic investors act as a buffer against fluctuations in non-resident demand for local assets.

• Emergency Lending Assistance (ELA):

  • The BNM has the authority to provide ELA to supervised institutions and may require approval from the Financial Stability Executive Committee for non-supervised entities.
  • ELA can be collateralized or uncollateralized, though it has not been used since the 1990s.
  • The BNM is reviewing its ELA guidelines to strengthen the framework.

Capital Flow Challenges

• Capital Flow Volatility:

  • Global risk sentiment is a major driver of capital flows into and out of Malaysia.
  • Capital flow reversals and volatility have been significant challenges to financial stability, especially during periods of global risk aversion.
  • Capital outflows were sharp in 2009, followed by inflows in 2010, with volatility linked to the VIX index.
  • The standard deviation of private capital flows increased significantly from 2004 to 2011, with equity and bond flows showing distinct volatility patterns.

• Government Debt Market:

  • The government debt market is sensitive to foreign investment strategies.
  • Foreign holdings of government securities increased from 10% to 29% between 2007 and 2012, while the EPF's holdings decreased from 50% to 31%.
  • The BNM has used foreign reserves to stabilize the exchange rate during capital flow shocks, with a correlation of 95% between private capital outflows and reserve levels.
  • The BNM's active use of foreign reserves helped limit the devaluation of the ringgit during the global financial crisis, with a peak devaluation of 15% compared to over 25% in other regional countries.

• Reserve Management:

  • The BNM reduced the role of foreign exchange swaps and the statutory reserve requirement to 1% to manage liquidity.
  • The drawdown of reserves during 2008–2009 was significant (50 billion USD), but they were rapidly rebuilt after 2010 due to increased capital inflows.
  • The current level of foreign exchange reserves is considered adequate, equivalent to over 8 months of imports.

Key Information

• Exchange Rate:

  • The ringgit appreciated at an average rate of 3% annually after the abandonment of the peg in 2005.
  • During the 2008–2009 crisis, the ringgit depreciated sharply but remained relatively stable due to BNM's use of foreign reserves.
  • The BNM manages the exchange rate symmetrically, allowing market forces to guide it.

• Inflation:

  • Inflation was volatile during the global financial crisis, peaking at 8% in 2008 and dropping to -2% in 2009.
  • It has since stabilized at around 2%, consistent with long-term trends.

• Liquidity Management:

  • The BNM's liquidity management has been effective in maintaining stability, supported by a strong banking sector.
  • The interbank market plays a key role in daily liquidity management, though its impact on term liquidity distribution is limited.

• Capital Flow Management:

  • Capital flow volatility is a systemic issue, with Malaysia experiencing more pronounced fluctuations than some regional peers.
  • The BNM has used reserves and liquidity management tools to counteract these fluctuations and maintain financial stability.

Conclusions

• Malaysia's monetary and liquidity frameworks have been resilient, even during the global financial crisis.
• The BNM's active role in managing liquidity and exchange rate stability has been crucial.
• The country has experienced significant capital flow volatility, but its domestic investor base and BNM's interventions have helped maintain stability.
• The BNM is continuously reviewing and improving its liquidity and ELA frameworks to better respond to future challenges.