It was a time when there was an absence of speculators. It was only in 1997-98 when the ringgit and other regional currencies came under speculative attack. The volume of foreign exchange transactions had become massive, far exceeding volume of trade and the normal financial flows. This resulted in exchange rate volatility during the Asian crisis that occurred wave after wave. Regional currencies continued to plummet during this period. After more than a year of this turmoil and uncertainty in the foreign exchange market, Malaysia implemented selective capital controls and de-internationalised the ringgit. This was instrumental in restoring stability in the market. It acted very much like a circuit breaker. Offshore trading of the ringgit, the major source for financing the speculative attacks, was effectively eliminated. Within a year, all the controls that were imposed were removed. More than 10 years later, the ringgit, however, still remains non-internationalised. An important precondition for the internationalisation is the development of a robust foreign exchange market in our financial system. Financial stability The events surrounding the current financial crisis has brought into sharp focus the role of central banks in financial stability. As these events continue to unfold with great uncertainty on the financial markets and broader economy, allow me to reflect on Bank Negara Malaysia's own role in financial stability. In addition to its functions as the lender of last resort, Bank Negara Malaysia has also had the responsibility for the regulation of banking institutions.
Finally, the Central Bank could not have been successful in achieving our objectives and policies if we did not have the support in our country – from the Government, the financial and business communities, and the people of the country – for their confidence and trust in us during these 50 years. The Bank, going forward, through our policy actions and in discharging our responsibilities, will continue to uphold this trust that has been placed upon us. 6  BIS Review 12/2009