  Second, complement existing micro-prudential rules with macro-prudential instruments to address system-wide risks with the aim of ensuring greater resilience of individual institutions, and the financial system as a whole.   Third, enhance comprehensive cross-border crisis management and financial stability surveillance arrangements. This can be done via channels such as the EMEAP Monetary and Financial Stability Financial Committee, which was established in 2007 to enhance regional collaboration and cooperation in the area of macromonitoring and crisis management. Efforts are also directed to strengthen financial safety nets within the region (e.g. cross-border collateral arrangements, currency swap arrangements). We are quite confident these arrangements will further strengthen the resilience of regional financial systems and economies. These measures will become increasingly important in the light of our effort to increase the integration of financial systems within the region.   Fourth, establish a holistic framework for consolidated supervision. All the activities of financial conglomerates are within appropriate risk levels and not overly complex, and the large groups are not a source and channels for amplifying contagion effects. Supervisory cooperation initiatives at the regional level will also be directed at enhancing existing or introducing additional platforms (e.g. creation of supervisory colleges) for discussing issues related to the supervision and resolution of cross-border financial institutions.   Fifth, promote fair and transparent market conduct practices by financial institutions through heightened market conduct surveillance and transparency requirements, while also raising the level of financial capability of consumers through education and awareness programmes.
Therefore, we do not foresee a significant shift in our current approach to regulation following the proposed global financial reforms. In fact, this reinforces our thinking that the approach we are taking is appropriate for our system. Bank Negara Malaysia has been engaging the banking industry to better understand the impact that the proposed reforms have on Malaysia’s economy and financial system. This will allow us to develop implementation strategies for Malaysia after taking into account specific characteristics of the domestic financial system, including compensating tools and arrangements within the financial system that mitigate risks to financial stability. An important point to consider is that, the implementation process does not result in any unintended consequences. This is where engagement with the banking industry is of utmost importance. We used inputs from the industry and share the inputs at regional and international-level regulatory fora, thus providing an emerging market perspective to the recommended proposals. Malaysian financial reform, regulatory framework and conduct of supervisors Some key regulatory initiatives by Bank Negara Malaysia to further enhance its prudential regulatory framework and conduct of supervision moving forward.   First, to strengthen financial sector legislation through the modernisation and consolidation of existing regulatory/oversight laws under Bank Negara Malaysia’s purview. The enhanced legislation ensures that Bank Negara Malaysia is entrusted with the necessary mandate and power to maintain financial stability and to conduct effective supervision of financial institutions.