BANDAR SERI BEGAWAN — Brunei’s financial system remains robust despite economic uncertainty in the wake of the COVID-19 pandemic, the central bank’s chief said on Wednesday.

The pandemic has reflected the resilience and sustainability of the country’s financial system in 2020 after Autoriti Monetari Brunei Darussalam (AMBD) introduced measures to counter the impact of COVID-19, said AMBD managing director Hjh Rokiah Hj Badar.

Speaking during AMBD’s 19th anniversary seminar, she said the measures eased the financial burden of individuals and specific businesses as banks deferred loan repayments at the height of the coronavirus outbreak in Brunei.

AMBD was already monitoring the COVID-19 situation as early as January 2020 and considering its implications and risks to financial stability, she said.

In March last year, the government introduced a $450 million economic stimulus package to mitigate the impact of COVID-19, including the waiving of bank charges.

While there has been an increase in digital banking transactions during the pandemic, data from the Department of Economic Planning and Statistics showed that the financial sector reported a negative growth of 2.8 percent in 2020.

AMBD Deputy Managing Director (Regulatory and Supervision) Hjh Rashidah Hj Sabtu, a panelist at the seminar, said the key to a stable financial system is public confidence in financial institutions.
To maintain public confidence, she said the central bank issues guidelines that require financial institutions to meet the best international standards.

AMBD Managing Director Hjh Rokiah speaks during the central bank’s 10th anniversary seminar on June 23, 2021. Photo: Courtesy of AMBD

‘Currency peg led to stable prices’

In his speech, Minister at the Prime Minister’s Officer YB Dato Seri Setia Hj Awang Abdul Mokti Hj Mohd Daud said Brunei’s currency peg to the Singaporean dollar has allowed the sultanate to “enjoy a stable currency and prices”.

Both countries signed the currency interchangeability agreement in 1967, which has also promoted public confidence in the Brunei dollar, he said.

The Singapore dollar weakened to a three-year low against the US dollar in February 2020 but has since recovered after facing its worst recession amid the pandemic last year.

The minister said: “The currency board arrangement forms the basis of our monetary policy, where we continue to build on our capacity to carry out central banking responsibilities.

“This includes managing our currency reserves to back the money in circulation, acting as the banker and financial agent by introducing monetary tools such as the overnight reference rate and overnight standing facilities,” the minister added.

YB Dato Hj Awg Mokti, who sits on the AMBD board of directors, said the central bank has adopted lessons from the 2008 global financial crisis.
As the youngest central bank in ASEAN, AMBD has had to navigate changes in the financial sector and work with other industry players to ensure financial stability, he said.

AMBD was established on January 1, 2011 to formulate monetary policy, regulate banks and ensure a stable currency.
The minister added that AMBD has also been working to protect the integrity and reputation of Brunei’s financial sector from the threat of financial crimes through its Financial Intelligence Unit (FIU).
The FIU plays the role of improving overall compliance of financial institutions and non-financial businesses in Brunei’s Anti-Money Laundering and Combating of Terrorist Financing Framework.
He said steps have been taken to improve the payment infrastructure for households and businesses.

“These payment systems are fundamental in supporting the development of our capital market, promoting [digital payments], as well as fostering international and regional economic integration,” the minister added.