# Bank Negara Malaysia: What the Central Bank Is Legally Required to Do

> Entity page for Malaysia's central bank — its statutory objects and nine primary functions under the Central Bank of Malaysia Act 2009, how it is governed, which laws it enforces, and the financial matters that sit outside its remit.

- Category: economy
- Language: en
- Status: published
- Updated: 2026-07-24
- Canonical: https://negaraku.md/en/economy/bank-negara-malaysia

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## At a glance

| | |
| --- | --- |
| Name | Bank Negara Malaysia / Central Bank of Malaysia |
| Type | Statutory body; the central bank for Malaysia (s.4, Act 701) |
| Operations began | 26 January 1959 |
| Governing statute | Central Bank of Malaysia Act 2009 (Act 701), in force 25 November 2009 |
| Predecessor statute | Central Bank of Malaysia Act 1958, repealed by s.99 |
| Capital | RM100 million (s.6(1)); any increase is subscribed and paid by the Government (s.6(2)) |
| Head office | Kuala Lumpur (s.3(4)) |
| Governor | Abdul Rasheed Ghaffour, the 10th Governor, in office since 1 July 2023 (five-year term, s.15(4)) |
| External auditor | The Auditor General (s.11) |
| Website | `bnm.gov.my` |

The 2009 Act did not create a new institution. Section 3 says the body corporate
established under the repealed 1958 Act "shall continue to be in existence" — the
same legal person, given a sharper mandate.

## The two objects, and the nine functions

Almost every question about what BNM may or may not do resolves to section 5.

**Section 5(1) — principal objects:** to promote monetary stability and financial
stability conducive to the sustainable growth of the Malaysian economy.

**Section 5(2) — primary functions:**

| # | Function |
| --- | --- |
| a | Formulate and conduct monetary policy in Malaysia |
| b | Issue currency in Malaysia |
| c | Regulate and supervise financial institutions subject to the laws enforced by the Bank |
| d | Provide oversight over money and foreign exchange markets |
| e | Exercise oversight over payment systems |
| f | Promote a sound, progressive and inclusive financial system |
| g | Hold and manage the foreign reserves of Malaysia |
| h | Promote an exchange rate regime consistent with the fundamentals of the economy |
| i | Act as financial adviser, banker and financial agent of the Government |

Section 5(3) grants only the powers "necessary, incidental or ancillary" to those
functions, and section 5(4) requires the Bank to have regard to the national
interest in exercising them. Read together, they are both a licence and a fence.

## Who decides what

BNM's decisions are deliberately spread across statutory bodies, not concentrated
in the Governor.

| Body | Composition | What it decides |
| --- | --- | --- |
| Board of Directors | Governor, up to three Deputy Governors, five to eight appointed directors (s.14(3)); chaired by the Governor (s.19(1)) | General administration, budget, oversight of management |
| Monetary Policy Committee | Governor, Deputy Governors, and three to seven other members including external members (s.23(2)) | Monetary policy and the Overnight Policy Rate |
| Financial Stability Executive Committee | Governor, one Deputy Governor, three to five members appointed by the Minister on the Board's recommendation (s.37(2)) | Liquidity assistance, capital injections and vesting orders tabled under s.38 |
| Shariah Advisory Council | Members appointed by the Yang di-Pertuan Agong on the advice of the Minister after consultation with the Bank (s.53) | Ascertainment of Islamic law for Islamic financial business (s.51) |
| Board Governance, Audit and Risk Committees | Board committees required by s.21 | Nominations and budget recommendations; audit; risk oversight |

Two appointment rules matter: the Governor is appointed by the Yang di-Pertuan
Agong for a term of five years, and the Deputy Governors by the Minister of
Finance for three years (s.15(1), s.15(4)).

The MPC must meet at least six times a year (First Schedule, paragraph 3), and
section 24 obliges the Bank to publish a monetary policy statement — decision
plus rationale — after every meeting. The Overnight Policy Rate has stood at
2.75% since the cut on 9 July 2025 and was left unchanged at the meeting of
9 July 2026. How that single number travels to your loan is covered in
[the Overnight Policy Rate](/en/economy/opr-monetary-policy).

## What BNM actually regulates

BNM's supervisory reach is defined by the statutes it administers, not by the
word "financial".

| Statute | Who it covers |
| --- | --- |
| Financial Services Act 2013 | Banks, insurers, payment system operators and other approved persons |
| Islamic Financial Services Act 2013 | Islamic banks, takaful operators and Islamic market participants |
| Development Financial Institutions Act 2002 | Prescribed development financial institutions |
| Money Services Business Act 2011 | Money changing, remittance and wholesale currency businesses |
| Currency Act 2020 | Currency management and currency processing businesses |
| AMLA 2001 | BNM acts as the competent authority appointed by the Minister |
| Central Bank of Malaysia Act 2009 | The Bank's own objects, powers and financial stability toolkit |

Beyond licensing, the Act arms the Bank for stress: it may demand information
relevant to financial stability from other supervisors and from unsupervised
entities (s.30), specify measures to limit the build-up of risk (s.31), extend
liquidity assistance (s.32), and operate a credit bureau collecting credit
information on financial institutions' customers (s.47).

## What BNM does not control

This is the half most explainers skip.

- **The capital market.** Shares, bonds and sukuk, unit trusts, fund management,
  take-overs and licensed intermediaries fall to the Securities Commission
  Malaysia, established on 1 March 1993 and regulating entities licensed under
  the Capital Markets and Services Act 2007. Crowdfunding and P2P platforms are
  SC-registered, not BNM-licensed — see
  [equity crowdfunding and P2P financing](/en/business/equity-crowdfunding-p2p-malaysia).
- **Deposit insurance.** PIDM, not BNM, protects eligible deposits up to
  RM250,000 per depositor per member bank. It is automatic and free.
- **Digital assets.** Under the 6 December 2018 joint statement, the SC regulates
  ICOs and digital asset exchanges; BNM reiterated that digital assets are not
  legal tender in Malaysia.
- **The exchange rate regime.** Determined by the Minister of Finance on the
  Bank's recommendation (s.66(1)). BNM conducts foreign exchange operations
  autonomously within it — see
  [foreign exchange policy](/en/business/foreign-exchange-policy-malaysia) and
  [what moves the ringgit](/en/economy/ringgit).
- **Fiscal policy and tax.** Budgets, subsidies and tax administration belong to
  the Ministry of Finance and [LHDN](/en/government/lhdn). BNM may extend only
  temporary financing to the Government, capped by section 71(3) at 12.5% of
  estimated federal receipts when aggregated with government securities it holds
  outside monetary policy operations.

Section 72 completes the picture. The Bank must keep the Minister informed of
policies relating to its principal objects; if the two disagree and cannot reach
agreement, the Board furnishes a statement, the Minister takes it to Cabinet, and
Cabinet may determine the policy to be adopted — with the Government accepting
responsibility for it. Section 22(2), meanwhile, states that monetary policy is
formulated and implemented autonomously by the Bank, without external influence.

## Common mistakes

- **Calling BNM a government department.** It is a statutory body with its own
  capital, audited by the Auditor General, whose financial statements and Board
  report are laid before both Houses of Parliament (s.13).
- **Assuming BNM regulates anything financial.** If the entity is not licensed,
  approved or registered under a statute in the table above, BNM is not its
  regulator.
- **Confusing the OPR with the rate you pay.** The MPC sets a policy rate;
  lenders set their own reference rates from it.
- **Expecting BNM to compensate for a failed investment.** Its consumer channel,
  BNMLINK, deals with institutions it regulates — not with schemes outside its
  remit.

## What's next

- The policy rate in practice: [the Overnight Policy Rate](/en/economy/opr-monetary-policy)
- The currency it issues: [the ringgit](/en/economy/ringgit)
- The price data it targets: [inflation and the CPI](/en/economy/inflation-cpi)
- Payments it oversees: [payment regulation in Malaysia](/en/business/payment-regulation-malaysia)
- Read the statute itself at
  [Act 701 on the AGC's Laws of Malaysia portal](https://lom.agc.gov.my/act-detail.php?act=701&lang=BI)
  or the [BNM legislation page](https://www.bnm.gov.my/legislation).

## Sources

- Central Bank of Malaysia Act 2009 (Act 701), incorporating amendments up to Act A1616/2020 — https://www.bnm.gov.my/documents/20124/277ebcd5-9c21-209b-3984-170ba28351d6 (Bank Negara Malaysia)
- Act 701 — Central Bank of Malaysia Act 2009 (act detail) — https://lom.agc.gov.my/act-detail.php?act=701&lang=BI (Attorney General's Chambers of Malaysia)
- Legislation — laws administered by the Bank — https://www.bnm.gov.my/legislation (Bank Negara Malaysia)
- Our Roles — About the Bank — https://www.bnm.gov.my/introduction (Bank Negara Malaysia)
- Governors of Bank Negara Malaysia — https://www.bnm.gov.my/governors (Bank Negara Malaysia)
- Statutory Committees and Councils — https://www.bnm.gov.my/committees (Bank Negara Malaysia)
- Monetary Policy Committee — https://www.bnm.gov.my/committees/mpc (Bank Negara Malaysia)
- Overnight Policy Rate decisions — https://www.bnm.gov.my/monetary-stability/opr-decisions (Bank Negara Malaysia)
- Joint Statement on Regulation of Digital Assets in Malaysia — https://www.bnm.gov.my/-/joint-statement-on-regulation-of-digital-assets-in-malaysia (Bank Negara Malaysia and Securities Commission Malaysia)
- About the SC — https://www.sc.com.my/about/about-the-sc (Securities Commission Malaysia)
- Deposit Insurance System — FAQs — https://www.pidm.gov.my/general/faqs/deposit-insurance-system (Perbadanan Insurans Deposit Malaysia (PIDM))

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Source of truth: https://github.com/negaraku-md/NegaraKu.md
License: CC BY-SA 4.0