THE referline on Page 1 and the heading of the report on Page 2 of The Brunei Times (Nov 30, 2010 should have read "Brunei Monetary Authority comes into force on Jan 1" and not as mentioned. The error is regretted. The Brunei Times
THE countdown is ticking for the official set-up of the Brunei Monetary Authority on Jan 1, with many pondering whether there will be changes in the Sultanate's financial regulations.
In a birthday titah in July, His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam announced the establishment of a national monetary body, which will come into force next year (which begins tomorrow).
His Majesty said the monetary body will be responsible for overseeing monetary policies, supervising financial institutions and management of currency.
The announcement of the monetary authority came as His Majesty, who is also the Minister of Finance, had been stressing the importance of maintaining the Sultanate's peace and prosperity through proper management of funds and debts.
"Insyallah, in line with international best practices, my government will create history, in the aspect of financial matters, with the establishment of the Monetary Authority of Brunei Darussalam to be enforced on January 1, 2011," the monarch said in his 64th birthday titah, which was televised live from the Istana Nurul Iman.
The debates spawned speculation among professionals in the financial sector on what this would mean for Brunei, with some predicting that this may mean that the Brunei dollar will be de-pegged from the Singapore currency.
However, the Ministry of Finance (MoF) has debunked that notion. In a press release, it said, "The Government of His Majesty The Sultan and Yang Di-Pertuan of Brunei Darussalam has no intention or plan to terminate the Currency Interchangeability Agreement between Brunei Darussalam and Singapore", which allows the two countries' currencies to be at par with each other.
It "has worked very well for both Brunei Darussalam and Singapore", the ministry said, referring to the agreement that has been in effect since June 12, 1967.
"Both countries continue to benefit in terms of currency stability and economic growth from the said arrangement," the ministry said. "This has been acknowledged repeatedly by the International Monetary Fund (IMF) including in its Public Information Notice (PIN) no 10/71 issued recently on 3 June 2010 which states that 'Directors agreed that the peg to the Singapore dollar serves Brunei Darussalam well'."
In Singapore, the Monetary Authority of Singapore (MAS), which was established in 1970, is also the central bank of Singapore and according to the main website of MAS, some of the responsibilities of the authority includes the conduct of monetary policy, the issuance of currency and the oversight of payment systems. It also serves as banker and financial agent of the Singapore government.
MAS also conducts integrated supervision of financial services and financial stability surveillance, it manages the official foreign reserves of Singapore and it is also responsible for developing Singapore as an international financial centre.
After the Singapore Parliament passed the Monetary Authority of Singapore Act, which led to the formation of MAS in 1971, the regulatory monetary body was given the authority to regulate all elements of monetary, banking and financial aspects of Singapore.
The MAS has been given powers to act as a banker to and a financial agent of the government. It has also been entrusted to promote monetary stability, and credit and exchange policies conducive to the growth of the economy.
"In April 1977, the government decided to bring the regulation of the insurance industry under the wing of the MAS. The regulatory functions under the Securities Industry Act (1973) were also transferred to MAS in September 1984," stated the information from the MAS website.
The MAS now administers the various statutes pertaining to money, banking, insurance, securities and the financial sector in general. Following its merger with the Board of Commissioners of Currency on October 1, 2002, MAS has also assumed the function of currency issuance.
In Brunei, the monetary regulations are overseen by the MoF, which has five major departments: the Brunei Investment Agency (BIA), the Treasury, Royal Customs and Excise, Supply and State Stores and the Employee Trust Fund. The MoF, additionally has nine divisions: Administration, Expenditure, State Tender Board, Financial Institution Division, Brunei International Financial Centre, Research and International, Revenue, Brunei Currency and Monetary Board and the Investment Unit.
According to its main website, "one statutory body within the purview of the Ministry of Finance is ... the Brunei Currency and Monetary Board", which is tasked to insure financial policies and regulations are to be carried out to achieve a stable financial environment, "to ensure the international and public confidence in the nation's financial system and at the same time to encourage the development of the financial sector". The Brunei Times