Jessica Chew Cheng Lian: Opening remarks - FEN Community of Practice's virtual panel discussion Opening remarks by Ms Jessica Chew Cheng Lian, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Financial Education Network (FEN) Community of Practice's virtual panel discussion, 26 October 2021. * * * Distinguished panelists, members of the Financial Education Network, ladies and gentlemen. A very good afternoon. The late Mr. Kofi Annan, former Secretary-General of the United Nations, once said that “Education is the premise of progress, in every society, in every family,” and “Literacy is a bridge from misery to hope.” Reflecting on the onslaught of the pandemic on lives and livelihoods these past two years, the financial education community must surely ask how we can and must prepare our community better to face the financial challenges ahead, both in the short and longer term. It is my pleasure to be invited to deliver the Opening Remarks today at this inaugural Financial Education Network Community of Practice. Let me especially thank the distinguished speakers who are joining us today from the Australian Securities and Investment Commission, the New Zealand Retirement Commission, the New Zealand Council for Educational Research, and Hong Kong’s Investor and Financial Education Council for graciously taking the time to share your experience in pursuing financial education strategies with us. FEN was formed as an inter-agency platform comprising eight member institutions that are committed to raise the level of financial literacy in Malaysia.
It is a system that reduces the monetary authority's discretion, and is especially effective in eliminating the risks of political influence in policy decisions. Many countries have adopted this regime, among the developed economies, these include the United Kingdom, Canada and Sweden; while among emerging economies they include Chile, Thailand and South Africa. A key purpose of the inflation target regime is to coordinate inflation expectations. Tthat contributes to fulfilling the targets and once the targets are achieved, credibility is enhanced. Therefore, it is essential that we work towards preserving this credibility, eliminating any doubt as to the commitment to fight inflation. It is important to highlight that this fight against inflation should be carried out with no artificial measures, as the effectiveness of such measures is temporary, and they introduce short and longterm distortions in the economy. An ally in the inflation targeting regime is the floating exchange rate regime. In our country, where there is still dependence on foreign capital, this regime is adequate, as it directly absorbs part of external shocks. The exchange rate in this regime has as a purpose establishing equilibrium in the balance of payments. Its flexibility helps ensure that the demand for foreign currency will equal the supply without draining the Central Bank's international reserves. The inflation targeting regime helps to buffer the shocks hitting the economy. The flexibility of this system facilitates the absorption of these shocks, while transparency in the rules allied with explicit targets reinforce credibility in the fight against inflation.