Module 6 -Malaysian Financial System

L-030-3

Level 3,
Module 6

1. Role and function of the Central Bank of Malaysia (Bank Negara Malaysia).


Bank Negara Malaysia is the central bank for Malaysia. It was established on 26 January 1959, under the Central Bank of Malaya Ordinance, 1958, with the following objectives:
To issue currency and keep reserves safeguarding the value of the currency;
To act as a banker and financial adviser to the Government;
To promote monetary stability and a sound financial structure;
To promote the reliable, efficient and smooth operation of national payment and settlement systems and to ensure that the national payment and settlement systems policy is directed to the advantage of Malaysia; and
To influence the credit situation to the advantage of the country.



2. The effect on the economy developments in Malaysia if the ringgit experience currency ‘devalution’.

A country’s currency devaluation is the fall of value in the exchange rate of a country's currency. It can occur due to market forces, where changes in the demand for or supply of a foreign currency change the equilibrium price.
As the value of a local currency depreciates, all exports become cheaper to overseas customers. The country lost control over pricing of its domestic products. The demand for the exports will increase.

Conversely, the local prices of imports will increase causing domestic demand for these imported goods and services to fall. Inflation will increase drastically.

The conclusion is that cost of living increases and due to the devaluation of currency, the stock market of the country become even cheaper, therefore we are exposed to foreign syndicate that will speculate our stock market. Foreign financial giant syndicate may also take the opportunity to use the strength of their currency to purchase share of local bank, thus local bank ownership belongs to foreign companies. It will also increase the statistic of unemployment and a very unstable government. This in turn will cause a chaos in our financial and economic system




3. Meaning and illustration printed on the denominations of 5, 10 and 50 ringgit notes.





The RM5 polymer banknote, issued for circulation by Bank Negara Malaysia from 26 October 2004, retains the existing design, colour which is green, size and certain security features of the existing RM5 paper banknote. However, the polymer banknote is more durable and has unique security features when compared to existing paper banknote.
In addition, there are a number of new security features such as the clear window with the shadow image of the Prime Minister's office at Putrajaya, the embossed printing of numeral 5 in the window, the Bank's logo on the front of the polymer banknote, and the opaque (non-transparent) window on the back of the polymer banknote with the Bank's logo.
The theme of the new series, "Wawasan 2020" reflects Malaysia's economic development and growth towards a fully developed country. For the RM5 denomination, the background motif depicts the famous landmark in Kuala Lumpur; the Petronas Twin Tower. This is represented by Malaysia Airport of KLIA (Kuala Lumpur International Airport.) the latest and an important gateway to Malaysia. This mark the importance of the transportation in Malaysia's economy. The new series will also use RM as the currency symbol for the Malaysian Ringgit.





The theme of the new series, "Wawasan 2020" reflects Malaysia's economic development and achievement towards a fully developed country. For the RM10 denomination, the background motif depicts modern transportation by air, land and sea. This is represented by Malaysia Airlines' aircraft, Light Rail Transit System's train and Malaysia International Shipping Corporation's container vessel plying the imagery sea routes around the world to signify the importance of the transportation in Malaysia's economy. The new series will also use RM as the currency symbol for the Malaysian Ringgit.
The new RM10 note retains the red colour and the size is slightly reduced to facilitate easier handling. The intaglio (raised printing) of the portrait of the First Seri Paduka Baginda Yang di-Pertuan Agong is retained as a dominant feature.





The theme of the new series, "Wawasan 2020" reflects Malaysia's economic development and achievement towards a fully developed country. For the RM50 denomination, the background motif depicts the mining sector. This is represented by a central oil drilling platform together with wellhead control valves. In the background are images of oil pipes - symbolic of the many branches of the oil industry. The new series will also use RM as the currency symbol for the Malaysian Ringgit.


4. Opinion on the best method to handle money as a traveler;
The are many ways that a person can use to handle or carry money as a traveler. Among them are in fiscal currency notes, credit cards and the most popular of them is travelers cheques. The safest in my opinion is traveler’s cheque in which it works like cash, where we have a title or proof of ownership over it unlike cash where if it is lost, any finder can utilized it. Traveler’s cheque requires the counter signatory before the bank as well as proof of identity as well as proof of purchase of the traveler's cheque. Even if the person who is not the owner finds the travelers cheque and was able to forge the signature, he or she may not be unlikely able to proof the ownership by producing the purchase slip of the traveler’s cheque. They will also not likely to produce their identity as this will expose them to be trace and subsequently arrested for theft.