KUALA LUMPUR:Malaysia's strong financial institutions, system and preparedness can safeguard its economy from falling into a crisis, said Bank Negara Malaysia Deputy Governor Jessica Chew.

“We have the capacity to respond to the potential spike in infections much better than we did, say, in March.

“(Hence), we are able to deal with the rise in infections in a much more targeted and much more focused manner, and we believe that this will be the response, going forward," she said during a virtual briefing in conjunction with the publication of the first half (1H) 2020 Financial Stability Review released today.

Chew said this in reply to a question on whether the central bank foresees a financial crisis in the near term following the spike in COVID-19 infections in the country.

Yesterday, 660 new COVID-19 cases were reported, bringing the total number of infections recorded to 16,880.

Chew also noted that the current banking system is substantially stronger compared to the time of the Asian financial crisis (AFC) in 1997/98, with 18 per cent capital ratio (AFC: 10 per cent), and this is due to the stronger lending standard.

She added that Malaysia’s bond market is also much more developed compared to during the AFC, therefore the degree of concentration of economic dependence for funding on the banking system has reduced.

Asked if the recent political development can affect financial stability, Chew said the central bank’s regulatory and supervisory policies are independent, and as such, unaffected by any political development.

“We have a very clear mandate under the law as to what we are responsible for and what we can and cannot do.

“We operate strictly within that remit so our assessment is really very much driven by ensuring that our financial intermediation is not disrupted, that payment and financial services to the public continue to proceed and that the financial market conditions are orderly,” she said.

-- BERNAMA