BNM, Thailand on cross-border collateral arrangement

PETALING JAYA (Feb 2, 2012): Bank Negara Malaysia (BNM) and the Bank of Thailand (BOT) signed a memorandum of understanding (MoU) to enter into a cross-border collateral arrangement to facilitate a reciprocal operational arrangement aimed at enhancing liquidity facilities to financial institutions in both countries.

Source from (The Sun Daily): http://www.thesundaily.my/news/284313
Published: February 03, 2012

Source from (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/siathai/Article/
Published: February 03, 2012

In a joint statement issued on Thursday, they said the collaboration will further support both central banks in preserving monetary and financial stability as well as strengthen the co-operation of both countries in the area of domestic liquidity management.

The MoU also underlines the recognition by both central banks towards the growing presence of cross-border banking and the importance of trade-linkages between the two countries.

Under this arrangement, financial institutions operating in Malaysia may obtain ringgit liquidity from BNM by pledging Thai baht or Thai government and central bank debt securities with BNM.

Similarly, financial institutions operating in Thailand may obtain Thai baht liquidity from BOT by pledging ringgit or Malaysian government and central bank securities.

"This initiative will further strengthen cross-border liquidity management in our financial systems and reinforce our financial economic ties," said BNM governor Tan Sri Dr Zeti Akhtar Aziz.

She said the arrangement will also support the expanding regional activities of our financial institutions and will further enhance our regional financial linkages.

BOT governor Dr Prasarn Trairatvorakul said: "The reciprocal cross-border collateral arrangement between BNM and BOT will serve as a basis upon which further financial and economic collaboration can be established . It also marked the importance of cross-border banking operations and the facilitating role of both central banks. This is yet another important step as part of our plan towards further regional and global financial integration."