Given the divergence between offshore and onshore ringgit prices, arbitrage opportunities for non-resident investors persisted. To make things worse, even our own market players, began to consistently take the cue from the NDF market. This placed unwarranted downward pressure on the ringgit. Most unfortunate is the lack of concern by regulators where the NDF activities were thriving despite of the adverse impact on the affected currencies. With the extreme destabilising effects of the offshore ringgit NDF market on domestic ringgit pricing, we took a broad spectrum of measures to reduce the speculative and damaging influence of these activities. Part of this was our stricter enforcement of non-facilitation rules for offshore derivatives. The long-standing prohibition on domestic players to facilitate transactions of offshore markets was extended to non-resident financial institutions via a compulsory attestation requirement. We also facilitated and managed the exit of significant short-term positions related to the NDF market. Certainly, these aggravated the immediate pressures on the ringgit but were very necessary to any eventual stabilisation of the currency. I am pleased to share that a number of global financial institutions have complied with our requirements. But, there are still a few holdouts. We are perplexed as to how these financial institutions can continue to operate or facilitate an activity that clearly contravenes our rules and regulations. We will continue to enforce our measures and look at avenues to deal with those who facilitate the ringgit NDF activities. The destabilising implications arising from the offshore activities gave a bad name to the marketbased mechanism.

Muhammad bin Ibrahim: Perspectives and issues in navigating the development of the Malaysian financial market Remarks by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the ASEAN Risk Conference 2017 “Perspectives and Issues in Navigating the Development of the Malaysian Financial Market”, Kuala Lumpur, 24 May 2017. * * * Thank you ladies and gentlemen. Two years ago, I spoke at this very conference on ASEAN integration. Two years on, I am pleased to share that we have achieved substantial progress on this front. Among others, the ASEAN Banking Integration Framework and the bilateral frameworks to settle trade in local currencies are two significant milestones for financial integration. Today, I intend to speak on a few issues relating to ASEAN integration and outline the latest developments and challenges in the domestic financial market. For decades, globalisation has been the cornerstone of global economic development. Globalisation was a way to bring the countries of the world together to gradually flatten the intercountry disparities in income, wealth and overall standard of living, in hope that the motivation for war and conflict among countries would gradually reduce as disparities narrowed. Globalisation expanded trade and the free flow of capital, allowing countries to reap the benefits of comparative advantage while facilitating the growth of new sources of income and the transfer of knowledge and technologies. Truth be told, globalisation bore fruits that lead to greater economic growth, prosperity and wealth.