The Brunei Darussalam Central Bank (BDCB), previously known as the Autoriti Monetari Brunei Darussalam (AMBD), carries the responsibilities of the country’s monetary policy. It issues the Brunei currency, in addition to regulating and supervising banks and other financial institutions.
The central bank serves to attain price stability, ensure stability of the financial system, assist in the establishment and functioning of efficient payment systems, as well as foster and develop a sound, comprehensive and progressive financial services sector.
Following the renaming to BDCB on June 26, 2021, the Brunei Darussalam Central Bank Act 2021 was enforced, replacing the Autoriti Monetari Brunei Darussalam Act.
By definition, a monetary policy constitutes a macroeconomic policy laid down by a central bank. It involves the management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives such as inflation, the rate of consumption, economic growth and overall liquidity.
Therefore, the central bank is viewed as the backbone of the country’s financial environment and acts as a regulatory body responsible for the development of the financial sector.
BDCB’s response had been swift as the pandemic spread across the world. By February 2020, the central bank had initiated consultations with financial institutions and advised them to be alert and plan ahead on the possibility of COVID-19 outbreak in Brunei.
By the end of March 2020, a few weeks after the first case was detected, BDCB was able to support the government’s economic stimulus package. By allowing financial banks and financial institutions to temporarily defer loan payments, this helped ease the burden of repayment on individuals and businesses affected by COVID-19.
In balancing the supervision and development of the financial sector, BDCB recognises the importance of supporting innovation and competition in the financial sector to encourage economic growth. A well-regulated financial sector helps attract business to the country.
Following the 2008 Global Financial Crisis, BDCB has adopted a risk-based supervisory approach and cooperates with other financial industry players to ensure the financial system’s stability.
The country recognises the threat posed by money laundering and terrorism financing which disrupt the country’s security and economic activities. On this note, the Financial Intelligence Unit (FIU) plays a key role in combatting such financial crimes such as financing of terrorism (CFT) matters and works closely with other relevant agencies in an interagency effort to uphold the integrity of the financial sector. FIU’s role as the Secretariat to the National Anti- Money Laundering and Combatting the Financing of Terrorism Committee (NAMLC) enables BDCB to support national coordination with law enforcement and relevant agencies.
The FIU also has a role in improving overall compliance of financial institutions and designated non-financial businesses to Brunei’s anti-money laundering and combatting of terrorist financing (AML/CFT) framework.
BDCB through the FIU reached a milestone last year as the winner of the Best Egmont Case Award (BECA), a highly coveted achievement among the 164 members of the Egmont Group of FIUs.
In 2017, BDCB embarked on the establishment of the Domestic Money Market project which consisted of three milestones. Under the first deliverable, BDCB issued a notice to introduce an averaging mechanism to the Minimum Cash Balance (MCB) requirement which provides banks with greater flexibility in their daily liquidity management.
BDCB also introduced the Syariah-compliant and conventional overnight standing facilities, aimed at facilitating the smooth functioning of the financial system through the lending/funding facilities and deposit/acceptance facilities. The introduction of these facilities also created a level playing field for Islamic and conventional banks in Brunei and the tenor for the facilities are on an overnight basis, offered to licensed banks in the country.
The central bank serves to attain price stability, ensure stability of the financial system, assist in the establishment and functioning of efficient payment systems, as well as to foster and develop a sound, comprehensive and progressive financial services sector.
Furthermore, the BDCB has issued guidelines on information technology risk management to banks and financial companies. The guidelines aim to strengthen licensees’ system security and recoverability as well as deploy strong authentication measures to protect customer data and transactions.
Copyright 2019 Borneo Bulletin Yearbook 2019 All rights reserved.
