Bank Negara Malaysia

The Central Bank of Malaysia (Abbreviation: NBM) or Bank Negara Malaysia in Malay (Abbreviation: BNM) is Malaysia's central bank. Its headquarters is located in Kuala Lumpur, the capital of Malaysia, and was established on January 26, 1959 (as the Central Bank of Malaya or Bank Negara Tanah Melayu) to issue currency, act as banker and adviser to the Government and influence the country's credit situation.

1 Governors
2 Recent history
3 Locations
4 References
5 See also
6 External links

[edit] Governors

Since its inception there have been seven governors.

Governor	Year
Tan Sri W H Wilcock	January 1959 - July 1962
Tun Ismail bin Mohamed Ali	July 1962 - July 1980
Tan Sri Abdul Aziz bin Taha	July 1980 - June 1985
Tan Sri Dato' Jaffar bin Hussein	June 1985 - May 1994
Tan Sri Dato' Ahmad bin Mohd Don	May 1994 - August 1998
Tan Sri Dato' Seri Ali Abul Hassan bin Sulaiman	September 1998 - April 2000
Tan Sri Dato' Sri Dr. Zeti Akhtar Aziz	May 2000 - Current

[edit] Recent history

In 1985, following the "Plaza meeting" of G-5 finance ministers in New York City, the US dollar fell sharply causing major losses in Bank Negara's dollar reserves. The bank responded by starting a program of aggressive speculative trading to make up these losses (Millman, p. 226). Jaffar Hussein, the Bank Negara Governor at the time, referred to this strategy as "honest-to-God trading" in a December 1988 speech in New Delhi.

In the late 1980s, Bank Negara under Governor Jaffar Hussein, was a major player in the forex market. Its activities caught the attention of many; initially, Asian markets came to realize the influence Bank Negara had on the direction of forex market. Alan Greenspan acting the Federal Reserve chairman later realised Bank Negara's massive speculation activities and requested the Malaysian central bank to curtail it.

BNM sold between $500 million on September 21, 1990 - $1 billion worth of pound sterlings in a short period, driving the pound down 4 cents on the dollar (Millman, p. 228). In response, bankers began front running Bank Negara's orders. Two years later, Bank Negara attempted to defend the value of the British pound against attempts by George Soros and others to devalue the pound sterling. George Soros won and Bank Negara reportedly suffered losses of more than USD $4 billion. [1] Bank Negara lost an additional $2.2 billion in speculative trading a year later (Millman, p. 229). By 1994, the bank became technically insolvent and was bailed out by the Malaysian Finance Ministry (Millman, p. 229).

In 1998, Bank Negara pegged 3.80 ringgit to a US dollar after the ringgit substantially depreciated during the 1997 Asian financial crisis. In July 2005, the central bank abandoned fixed exchange rate regime in favor of managed floating exchange rate system an hour after China floated its own currency, resulting in capital flight of more than USD 10 billion. Bank Negara continues to run negative interest rate differential to USD. The ringgit continues to trade within 1% of abandoned fixed rate.

[edit] Locations

Bank Negara's headquarters is located at Jalan Dato' Onn in Kuala Lumpur. A KTM Komuter station with the same name is located next door. An overhead crossing over Jalan Kuching and the Gombak River allows pedestrians access to the Bandaraya LRT station and the rest of downtown Kuala Lumpur.

Bank Negara had previously maintained branches in each of the country's state capitals. Most of them were closed in the 1990s when retail banks began taking over most of the counter services. There are still branches in Penang, Johor Bahru, Kota Kinabalu, Kuching and Kuala Terengganu, while the Shah Alam branch was converted into a currency distribution and processing centre. Bank Negara also retains representative offices in London and New York City, and a personnel training centre in Petaling Jaya, Malaysia.