Malaysian and Thai central banks in joint push for financial stability

Eligible financial institutions operating in Malaysia might obtain Malaysian ringgit liquidity from Bank Negara by pledging Thai baht, or Thai government and central bank debt securities with it.

The central banks of Malaysia and Thailand have agreed to work more closely together for the common good.

Bank Negara Malaysia and the Bank of Thailand have signed a Memorandum of Understanding to facilitate a reciprocal operational arrangement aimed at enhancing liquidity facilities to financial institutions in both countries.

Both central banks said the collaboration would further support their goals to preserve monetary and financial stability. The MOU should also strengthen the cooperation of Malaysia and Thailand in domestic liquidity management.

Under the MOU, eligible financial institutions operating in Malaysia might obtain Malaysian ringgit liquidity from Bank Negara by pledging Thai baht, or Thai government and central bank debt securities with it.

Eligible financial institutions operating in Thailand may obtain Thai Baht liquidity from the Bank of Thailand by pledging Malaysian Ringgit or Malaysian government and central bank securities.

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said the agreement would further strengthen cross-border liquidity management in the respective financial systems and reinforce financial and economic ties.

On the other hand, Bank of Thailand Governor Dr. Prasarn Trairatvorakul said the reciprocal cross-border collateral arrangement would serve as a basis upon which to build more financial and economic collaboration.