More extensive powers to achieve financial stability In the area of financial stability, our new Central Bank Act incorporates an explicit mandate of the Central Bank for financial stability. This mandate is articulated in terms of the risks to financial stability that includes risks that disrupts the financial intermediation process (including the orderly functioning of the financial markets), or which affects public confidence. The Act also provides comprehensive provisions for heightened surveillance, pre-emptive actions and expanded resolution powers to facilitate the swift and orderly resolution of financial crises. The Bank may also take appropriate intervention actions to avert risks that stem from unregulated entities. The Act further acknowledges the importance of coordinated policy measures across different agencies whose actions can affect financial stability. Accordingly, the new Act provides for cooperation arrangements with other supervisory authorities and the ability of the Central Bank to make recommendations to such authorities on measures or safeguards for promoting financial stability. These new powers are complemented by strengthened institutional arrangements in the form of the establishment of a Financial Stability Executive Committee that will be formed to ensure the effective coordination of regulatory authorities in financial resolution. Enhanced governance and accountability framework With these enhanced powers, the governance and accountability framework in the Act has also been strengthened considerably. This relates to the enhanced role of the Board of Directors' in the oversight of the management of the Bank.

Greater harmonization and clarity about the triggers for action, the tools to return insured funds quickly to depositors, the authority to implement a quick resolution, and the legal powers to restructure and continue key banking functions would allow for more effective crisis management. Hence, it is not just about opening our borders; we need to examine how our domestic regulatory framework interfaces with that of other countries. International cooperation The regional cooperation among central banks in East Asia have advanced significantly in this recent decade in the aftermath of the Asian Financial crisis. The focus of cooperation has been in the areas of financial stability, financial markets and payment and settlement systems. The participation in the working, technical and high level committees have contributed towards efforts to facilitate the adoption of international standards for banking supervision and financial stability taking into consideration the regional perspective. It has also contributed towards identifying supervisory priorities and areas of concern that will have an impact on financial stability, and towards improving techniques relating to supervision and surveillance. Challenges pertaining to cross-border issues such as regulatory arbitrage, competition laws, regulatory harmonisation are, however, yet to be fully resolved. The new Central Bank of Malaysia Act 2009 gives Bank Negara additional flexibility and the mandate to engage in international cooperation. The Act allows for the Bank to engage with foreign supervisory authorities to coordinate and cooperate on financial stability measures.