Hence, Exter was successful in realizing two objectives in a single operation: price stability and banking system stability. While the broad objective of price stability remained unchanged over the years, the banking system stability was expanded to cover the entire financial system and, therefore, today, the central bank has been charged with the responsibility for maintaining financial system stability. Exter’s wish was that the new central bank would consolidate, under one umbrella, all financial operations which had been widely scattered at that time. Thus, the central bank was expected to encourage the public to make greater use of banks to keep their deposits and channel funds to the government securities market by building confidence in same. While submitting the draft bill on the central bank, Exter remarked that “good central banking is less good law than good practice”. What he meant by this is that a central bank should not rely solely on the legal powers given to it. The strict application of such legal powers sometimes leads to the destruction of sound market relationships. To make central bank policy more effective, it has to make its presence felt by others. Exter advised that it should be done “through the development of day-to-day relations of confidence and understanding between itself and various banking institutions than through the exercise of all of the powers given it” under the law.
As an institution, we have been blessed to have had pioneers who upheld the highest standards of excellence in our corporate conduct. The late Tun Ismail Ali, the first Malaysian governor from 1962 to 1980 was well known as a person of the highest integrity. I can recall his younger brother relating an episode in this regard. An aspiring architect at that time, he was told by the late Tun Ismail, not to ever set foot in the Bank while he was the Governor. Uncompromising and unyielding, we certainly should strive to assimilate Tun’s values and standards. Indeed, we are fortunate that his successors have continued his trademark standard of integrity, to the extent that it is deeply ingrained in our corporate DNA today. The Bank does not tolerate any wrongdoing which may tarnish its reputation, given that our solid reputation has been diligently built over the decades. We owe it to the public and future generations to preserve the integrity and credibility of the Bank. Thus, we have zero tolerance for unethical behaviour leading to fraud, including corruption. Staff must be mindful that their conduct must not give rise to any perception of corrupt practices. The Bank’s management will take stern action against those who perpetrate, facilitate or are complicit in such acts. We will not protect such wrongdoers and will cooperate with the relevant authorities to ensure that the appropriate punishments are meted out. In the last few years, the Bank has expanded its activities into project management.