With respect to borrowing, co-ordination is necessary in order to prevent separate Government agencies from competing with each other and ‘spoiling’ the market, especially in the early stages of its development, and to make possible the formulation of a properly diversified pattern of interest rates and maturities for the entire Government borrowing program.” Those Sections of the MLA that I referred to, and the relevant annotations in Exter’s Report, strongly suggest that the Central Bank should play a dynamic role in the formulation of fiscal policy, particularly in relation to a significant part of fiscal policy’s sphere of influence, namely that of borrowing and lending. In that context, it may be safely argued that, whilst the overwhelming responsibility for monetary policy has to be assumed by the Central Bank, a sizeable part of the responsibility in relation to fiscal policy is also cast upon the Central Bank. Fourth: Exter explains the unique position of the Governor, and the need for the Governor to be independent. This position is assured by the fact that the Governor is appointed for a 6 year term and cannot be removed from office, unless he has done any act, which in the opinion of the Governor General, (now, the President), is of a fraudulent or illegal character, or is against the interest of the Central Bank. Fifth: Exter discusses the limitations of the Central Bank: Once again, let me quote: “A central bank influences the economic life of a nation principally by monetary action.
There are now 14 Asian economies at investment grades, of which, nine are at or above the single A rating. At the same time, the supply side factors are also highly favourable. The huge financing needs of Asia will support a continuous expansion in bond issuance. According to the Asian Development Bank, Asia’ s infrastructure financing needs alone amounted to USD 8 trillion from 2010 to 2020. Equally important is the emergence of new and attractive bond asset classes. The two products that have caught most attention of global investors are the sukuks in Malaysia and the RMB dim sum bonds in Hong Kong. This is rightly so as these products connect the global market with the vast and increasingly prominent financial systems in the Islamic world and China. We have seen very encouraging development of the sukuk market in Malaysia, the symbol of Islamic financing. The amount of outstanding sukuks in Malaysia increased substantially from MYR 146 billion (USD 41.3 billion equivalent) at the end of 2006 to MYR 361 billion (USD 113.9 billion equivalent) at the end of 2011. Meanwhile, the growth of the RMB debt securities market has been phenomenal. In a short space of 5 years, the annual issuance amount lodged with the Central Moneymarkets Unit (CMU) in Hong Kong increased by 16 times from a modest amount of RMB 10 billion (USD 1.4 billion equivalent) in 2007 to RMB 172 billion (USD 27.3 billion equivalent) in 2011.