Bank Negara To Implement Measures To Curb Level Of Household Debt    
Industry News

Source: Bernama

KUALA LUMPUR, Oct 26 (Bernama) - Bank Negara Malaysia will implement measures to curb the level of household debt to ensure that it will not be a destabilising factor to the economy, governor Tan Sri Dr Zeti Akhtar Aziz said today.

"Although it is not an area of concern, this is something we will implement measures going forward to ensure that it will not be a destabilising factor to our economy because consumption demand has become an important driver for growth," she told reporters on the sidelines of the Global Islamic Finance Forum (GIFF) here today.

"But at the same time we want it to progress in a manner that is within prudential level and will not pose risk or undermine sustainability of our growth," she said.

Zeti said financial literacy awareness programme would be one of the areas to be looked into due to the lack of financial literacy, especially among youngsters, which was seen as one of the factors contributing to the rising household debt.

She was responding to a question on the possibility of rising household debt and measures that could be taken by the central bank.

Last week, the Malaysian Institute of Economic Research (MIER) raised concern over the rising household debt level which stood at 77 per cent of the gross domestic product (GDP).

In the central bank annual report last year, household debt was reported to have increased to 76.6 per cent for the year, the highest in Asia, from 63.9 per cent of the GDP in 2008.

Zeti said the household debt was currently being managed with various institutional arrangements to make sure that it was not beyond the prudential level.

On inflationary pressures, the governor said although the domestic economy was experiencing strong demand, Bank Negara did not see any inflationary level.

However, the central bank is ready with measures and flexibility to implement measures to contain any movement indicating bubble, Zeti said.

"Right now, we don''t see the formation of asset bubble in place in Malaysia. At this point, there may be pockets of area where we see some speculative activities but this is not generalised throughout our economy," she said.

On the currency war, Zeti said the ringgit has not experienced any pressure, adding that the local currency movement "is very much dependent on the inflow and outflow".

"The central bank is well positioned to undertake any sort of intervention in the market if conditions become disorderly or very excessive movements taking place within a very short period of time but so far, we are very pleased the market has been very orderly," she said.

She also said that the ringgit had strengthened about 10 per cent against the US dollar and remained relatively stable against regional currencies to date.

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