Sufficient liquidity in the banking system. Monitoring also in place.

This has happened: BNM’s 6 months moratorium on loans for businesses and Malaysianns. So, yes, it is still a hot topic at the moment and many questions were also asked. This was asked to me too, “Could I get a 100% home loan” since Bank Negara Malaysia (BNM) has eased the financial approval requirements? The answer is nope. It’s not to help first time home buyers, not this moratorium anyway.

This moratorium is aimed at ensuring businesses could continue to operate and not closing down during this Movement Control Order (MCO) period. Not all will survive but at least more would. As for the question of whether the banks themselves have enough liquidity to carry out the moratorium, here is BNM’s answer.

Article in Bank Negara Malaysia (BNM) said its recent 100 basis-point reduction to its statutory reserve requirement had released some RM30 billion into the banking system, on top of RM160 billion in excess liquidity. “Of this, approximately RM100 billion placements with the bank under open market operations can also be used to meet the liquidity needs of the banking system,” BNM said in a statement.

BNM also said that it will continue to supply daily ringgit liquidity to banks via various tools under its open market operations, including the outright purchase of government securities, foreign exchange swaps, reverse repos and the standing facility. BNM said it will also allow banks to drawdown on the capital conservation buffer of 2.5 percent, operate below the minimum liquidity coverage ratio of 100 percent, and utilise the regulatory reserves that were set aside during periods of strong loan growth. Banks would be expected to restore the buffers “within a reasonable period” after the end of the year. Please do read the full article in Article in

Perhaps another question. Will a recession happen in Malaysia? I have tried to search for at least one article which says that it has predicted that Malaysian will fall into a recession. At the moment, it’s mostly a downgrade of the potential GDP number instead. Hopefully this stays for a while until we see some light at the end of the tunnel to this COVID-19 issue. Then, we should be fine by then. STAY at HOME and please take care. MCO is now until 14th April 2020.

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