Central Bank of Malaysia also known as Bank Negara Malaysia (BNM) was established on 26 January 1959 under the Central Bank Ordinance 1958. The main functions and roles of central bank are: Supply currency, act as custodian of banks’ reserves and control value of Malaysian currency; Act as government’s banker and financial adviser;
Ensure financial stability and strong financial structure;
Act as commercial banks’ banker;
Control and influence the country’s credit situation to ensure a stable economic growth rate First, supply currency; act as custodian of banks’ reserves and control value of Malaysian currency. The central bank is the sole issuer of currency in the country. Holding of country’s official external reserve are keep at the Central Bank because it has the responsible for the safe-keeping reserves to protect Ringgit Malaysia (RM). To safeguard- the external value of ringgit Malaysia, central bank maintains the minimum external reserves amount to 80.59% of money issued are allowed to reserve. Second, central bank also acts as government’s banker and financial adviser. Central bank has close relationship with the government and it has the responsibility to represent government in civil loan programs and manage government’s civil debts. Third, the central bank will ensure financial stability and strong financial structure. Central bank will undertake the country’s economic intelligence and surveillance. Central bank need to ensure the money and credit are sufficiently elastic to meet the needs of domestic economy without straining the available resources. Fourth, act as commercial banks’ banker. Central bank give mandate to issue licences for banks. It also examines financial institutions to ensure that they can achieve high banking and professional standards. Firth, control and influence the country’s credit situation to ensure a stable economic growth rate. Centre bank will analyse and assesses the...