KUALA LUMPUR (March 27): Bank Negara Malaysia (BNM) said Malaysia’s banking system has ample liquidity buffers to weather periods of uncertainties or to meet any potential exigent needs.

In its 2018 Financial Stability Report, the central bank said its stress tests continue to affirm the banking system’s resilience to a large reversal of capital flows.

The sufficient liquid assets are largely supported by stable funding sources comprising deposits and long-term borrowings.

“This was reflected in the banking system’s loan-to-fund (LTF) and loan-to-fund-and-equity (LTFE) ratios, which have been sustained at levels around 80% and 70%, respectively.

“The industry Liquidity Coverage Ratio (LCR), which measures the amount of high-quality liquid assets (HQLA) that banks hold to meet liquidity needs in a stressed scenario over a 30-day period, has also been rising steadily in line with the transition towards full implementation of the strengthened liquidity requirements since 2015,” it said.

Banking system surplus ringgit liquidity placed with the central bank rose in the second half of 2018 to RM171.8 billion (June 2018: RM156.2 billion; 2017: RM176.2 billion), as outflows from non-resident investors subsided, it added.