KUALA LUMPUR: Malaysia continues to be proactive in ensuring financial stability and avoiding excessive credit risks to the economy, said Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz.
“We have and will continue to address many of the issues and risks related to the formation of asset bubble,” said Zeti
She said three series of macro prudential measures have been introduced this year to prevent an asset bubble.
Zeti was responding to a question on whether Malaysia is experiencing an asset bubble that would burst if China’s economy tumbles and as global interest rates rise, as opined by financial
analyst Jesse Colombo.
The analyst published a cautionary piece in Forbes magazine about the bubble in emerging markets, in particular Malaysia’s economic situation.
Colombo’s gloomy outlook could have been spurred by Fitch Ratings’ downgrade of Malaysia’s credit outlook to “negative” from “stable” three months ago.
Fitch has placed doubts on Malaysia’s ability to repay money, in view of rising debt levels.
Malaysia, which has a long-term foreign currency-denominated rating of “A-” at Fitch, has been operating on budget deficits every year since 1998.
At 53.3 per cent, Fitch said Malaysia’s debt-togross domestic product ratio is the highest among 12 emerging Asian markets after Sri Lanka.
This trend, seen in other Asian nations, has caused some punters to draw comparison between the current turbulence and the 1997/1998 Asian financial crisis.
"Conditions between now and in 1997/1998 are different. We are now on a growth path," Zeti told a press conference in conjunction with the Southeast Asian Central Banks (SEACEN) 30th anniversary conference on greater financial integration and financial stability, here, yesterday.
Zeti said domestic demand is driving Malaysia's economic growth and the country is not at the epicentre of the recent global financial crisis.
"Our financial intermediaries remain resilient and the supply of credit was never disrupted.
"There is confidence in the financial system. This is the result of financial reforms that have strengthened the foundation of our system.
"We believe that credit growth has moderated to a sustainable pace that supports the growth of the economy. In this regard, we continue to monitor the conditions."
Meanwhile, Michael Zamorski, who is SEACEN adviser on financial stability, said its members should meet regularly.
"There's definitely no complacency with regard to financial stability in this region," he said.
SEACEN yesterday also unveiled the inaugural issue of its new publication, SEACEN Financial Stability Journal.
It will be published semi-annually and is intended to advance thought leadership and collaboration on financial stability matters among SEACEN members.