Bnm Case Study

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As a part of financial system, BNM acts as a vital organization which provides a conducive environment for the sustainable growth of the Malaysian economy. One of the most important functions played by BNM is issuing currency. In order to issue currency, BNM shall arrange for the printing of currency notes and stamping of coins. Besides, BNM will also issue, re-issue as well as exchange notes and coins at its office and other permitted agencies. On top of that, safe custody of unissued stocks of currency and for the preparation, safe custody and destruction of plate papers for notes printing and of dies for minting coins also needs to be arranged by BNM. Other than being the only organization authorized to issue currency, BNM also plays an…show more content…
BNM manages the account of government by providing cheque facilities, accepting funds and making payment on behalf of the government. Not only that, BNM also engaged in the foreign exchange business of the government. This institution is also a crucial source of funds to government, mainly as it provides momentarily advances to the government to cover any deficit in the budget revenue. This function correlates with the Bank Negara Malaysia Ordinance 1958. Nevertheless, BNM was tied to a certain legal limitations regarding the amount and duration of loans that they can offer to the government. For instance, the advances should not surpass 12.5% of the budget revenue of the government and must be paid back within three months after the end of the government financial year in which it is granted. The previous advances must be fully repaid in order for the BNM to approve additional funds and the central bank owns the responsibility to determine the rate of interest to be charged for its advances. On top of that, BNM is also involved in the management of national debt that allowed them to advice on the government’s loan program regarding items such as, terms and timing of loans and the issues of new forms of…show more content…
BNM needs to ensure that the value of currency which is ringgit at a stable rate and this will give benefit for the investment and the value of saving in future. Besides, BNM plays an important role in maintaining the price of goods to make sure that the inflation is low and stable so that the purchasing power of ringgit is not reduce. If inflation is too high, it will affect the growth of the economy since it will affect the exports and if inflation is too low, it will decrease in the profit of business.BNM leads its monetary policy by impacting the level of financing costs that borrowers need to pay on their credits and that contributors gain on their stores. At the point when the economy is overheating, the danger of expansion is high, money related strategy will be fixed by pulling back reserves from the saving money framework and raising financing

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