Regional economic links to grow, says Malaysian banker

17 january 2013

Regional economic and financial integration in Asia is expected to accelerate and deepen as the global economy declines, the Malaysian central bank’s deputy governor said on Monday.

“The increase in intra-regional cooperation has contributed to the economic growth within East Asian countries during this difficult time for the global economy, and has mitigated the slowdown in North America and Europe,” said Muhammad bin Ibrahim, deputy governor the Bank Negara Malaysia.

Intra-regional trade in Asia accounts for more than 50 percent of the region’s total exports, compared to 32 percent in 1995, calling for closer financial ties across the region, he said.

He was speaking at a dinner for Malaysia Banking Berhad, Malaysia’s largest financial services group, which opened its first branch in Beijing on Monday.

“In terms of the resilience of its financial systems, the region’s capacity to withstand shocks and downturns has been significantly enhanced,” the deputy governor said.

Payment and settlement arrangements among economies in the region have begun and the trend is for this to continue, which will lead to increasingly sophisticated and integrated financial markets in the region, he said.

The Malaysian central bank has been promoting direct pricing of the ringgit against the yuan, to promote trade and investment with China, it’s biggest trade partner.

In 2010, direct quotes between the yuan and ringgit in the interbank foreign exchange market on the China Foreign Exchange Trade System began. In March this year, real-time gross settlement in Malaysia was expanded to include settlement services in renminbi.