marzunisham omar : capital flows management for monetary and financial stability remarks by mr marzunisham omar, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the seminar and meeting of the seacen expert group on capital flows, kuala lumpur, 11 june 2019. * * * i am delighted to be here today. let me take this opportunity to express bank negara malaysia ’ s appreciation for the collaborative efforts of the seacen centre and the bank of japan that have gathered us here for this biennial seg event. it has been six years since i last attended the seg seminar in manila, back in 2013 as the newly appointed co - chair. i am truly honoured to have had the opportunity to work alongside deputy governor diwa. under his capable stewardship and intellectual guidance, the seg has developed into a beneficial platform for its members since it was established 19 years ago. as we approach two decades of the seg, it is timely that we re - establish our bearings to ensure we remain relevant and true to the original mission of contributing to the international dialogue on capital flows to ensure that the concerns and interest of the seacen group are adequately protected. 1 as most of our economies continue to face wave after wave of large and often volatile capital flows, i am reminded of the remark by professor jon kabat - zinn, a professor emeritus of medicine at the university of massachusetts who famously said : “ you can ’ t stop the waves, but you can learn to surf ”. 2 just like the surfers who do not have control over the speed and patterns of the waves, policymakers from small open economies do not have much control over the size, speed, and the direction of capital flows that each country faces. like it or not, capital flow volatility and the risks it entails are a by - product we have to deal with as long as we intend to benefit from free capital mobility. to paraphrase professor kabat - zinn, we can ’ t stop the flows, but we can learn to manage these flows in the best way possible. unlike the surfers, however, we policymakers do not have the luxury of repeating a surf when we make a mistake. there is no room for policy missteps as investors can be very unforgiving. this is the reason why it has always been my firm belief that timely sharing of experiences and lessons between policymakers is in itself a big part of policymaking.

management practices. an enterprise - wide approach is appropriate for setting objectives across the organization, instilling a culture attuned to risk, and ensuring that key activities and risks are being monitored regularly. clearly, there is always an opportunity to improve upon enterprise risk - management strategies and strengthening the discipline to implement those strategies effectively. but vigilance is critical, too, since problems can sometimes quickly arise in a business line or unit that has presented no past difficulties. accordingly, it is always helpful to evaluate the " what if " scenarios even for the most pristine of business units. but the manner in which risk - management challenges are addressed can - and should - vary across institutions, based on their size, complexity, and individual risk profile. in many cases, it simply does not make sense for small organizations to adopt the most sophisticated risk - management practices ; however, that does not absolve such smaller institutions of their responsibility to improve risk management. additionally, as supervisors, we want to ensure that institutions are not only identifying, measuring, and managing their risks but are also developing and maintaining appropriate corporate governance structures appropriate for their business activities and risk taking. our hope is that the guidance we offer on these various topics is becoming more consistent with financial institutions'own risk - management practices. today i have used the example of mortgage lending to stress the importance of erm, but there are obviously many other areas to which erm applies. we believe that the recently issued guidance on nontraditional mortgage products contains helpful reminders and recommendations for institutions using those products, ensuring that they recognize the full set of risks involved. as a final point, i would like to stress that supervisors at all five federal banking agencies, including the ncua and the federal reserve, aim to implement the guidance as consistently as possible across institutions, since we do understand institutions'concerns about this issue. of course, it is always a challenge to ensure that guidance is applied consistently throughout the industry, especially when institution - specific factors - such as portfolio concentrations and individual risk - management practices - might affect the manner in which the guidance needs to be applied to individual organizations. but we have already begun to undertake efforts across our agencies, including extensive communication and coordination, so that institutions are not subjected to needlessly differing treatment.