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Bank Negara Malaysia is announcing today the extension of the flexibility for banking institutions to use MGS and MGII to meet the SRR compliance until 31 December 2022. This flexibility which was previously announced on 5 May 2020, is currently applicable until 31 May 2021. The Statutory Reserve Requirement (SRR) ratio remains unchanged at 2.00%.
The decision to extend this flexibility is part of Bank Negara Malaysia’s continuous efforts to ensure sufficient liquidity to support financial intermediation activity. Since March 2020, the reduction in the SRR ratio by 100 basis points and flexibility to recognise MGS and MGII as part of SRR compliance have released approximately RM46 billion worth of liquidity into the banking system.
The SRR is an instrument to manage liquidity and is not a signal on the stance of monetary policy. The Overnight Policy Rate (OPR) is the sole indicator used to signal the stance of monetary policy, and is announced through the Monetary Policy Statement released after the Monetary Policy Committee meeting.
Bank Negara Malaysia
20 Jan 2021
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