As a financial safety net player with a mandate to promote financial system stability, our aspiration is to work towards the establishment of an effective resolution regime for Malaysia. Such a regime allows member institutions (MIs) to fail and be resolved in a prompt and orderly manner, without systemic disruption.
An important aspect of an effective resolution regime is resolution planning, which is part of the Recovery and Resolution Planning framework jointly established by Bank Negara Malaysia and PIDM in 2016. Bank Negara Malaysia is leading the recovery planning process, and has undertaken the recovery planning pilot exercises in 2018.
Resolution planning involves, amongst others, the assessment of the business structure, operational and financial interdependencies, the development of likely strategies and plans, which are specific to the MIs. This is essential for the enhancement of our state of operational readiness but does not exclude development of alternative courses of actions depending on the circumstances and the overall state of the financial system at the time of a resolution.
PIDM leads the resolution planning process. The development of robust and credible resolution plans during business as usual (BAU) increases the likelihood of the smooth execution of resolution actions, and contributes to the stability of the financial system. In 2019, following the completion of the recovery planning pilot exercises, we will commence the resolution planning pilot exercises with selected MIs.
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