Sistem kewangan negara tidak perlu suntikan - understanding a report

There are several things that I need to know regarding this statement. I'll dig it.

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Sistem kewangan negara tidak perlu suntikan
Oleh Daliza Ariffin (Utusan Malaysia)
Zeti Akhtar Aziz berucap semasa melancarkan Forum Kewangan Islam Malaysia (MIF) 2007 di Kuala Lumpur, semalam.

KUALA LUMPUR 13 Ogos – Sistem kewangan tempatan tidak memerlukan suntikan mudah tunai ketika ini kerana ia mempunyai dana mencukupi (the source) bagi mengelak kesan krisis subprima di Amerika Syarikat (AS). Gabenor Bank Negara Malaysia, Tan Sri Dr. Zeti Akhtar Aziz berkata, apa yang perlu dilakukan ialah memantau situasi semasa krisis itu dengan teliti.

‘‘Sekiranya keadaan memerlukan, bank pusat boleh menyediakan dana,’’ katanya kepada pemberita ketika ditemui selepas melancarkan Forum Kewangan Islam Malaysia (MIF) 2007, di sini hari ini. Beliau berkata demikian sebagai mengulas kebimbangan beberapa bank pusat mengenai krisis tersebut sehingga menyebabkan bank-bank pusat di Amerika Syarikat, Eropah, Australia, Jepun dan Kanada menyuntik mudah tunai (how) ke dalam sistem kewangan mereka.

Dr. Zeti berkata, buat masa sekarang terdapat kadar kecairan yang tinggi (by how much ? what is the benchmark ?) dalam sistem kewangan tempatan.‘‘Malah beberapa minggu lalu, pasaran telah menyerap kecairan (what event was it),’’ katanya.

Ketika ditanya sama ada BNM telah bekerjasama dengan bank pusat lain untuk menghadapi krisis semasa, beliau berkata, sebelum ini hubungan antara bank-bank pusat negara-negara lain sentiasa baik. ‘‘Di rantau Asia Timur, hubungan kami adalah baik sebelum ini dan berada dalam kedudukan yang baik untuk memahami apa yang berlaku di rantau ini dan kami akan memberi reaksi segera terhadap apa yang mungkin berlaku,’’ jelasnya.

Zeti yang menyifatkan situasi masih stabil berkata, sistem kewangan di rantau ini berada dalam keadaan kukuh untuk menghadapi sebarang masalah pada masa depan.

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This articles invite us to discuss about liquidity. In economy, liquidity (kecairan) means the ability of an asset to convert easily to cash (the most liquid form of value) through buying or selling activity without losing its value (or at least lose minimum value) and without causing the price to change significantly. For an easy example, when I sell my bracelet to Sy. Emas Jaya, the company is willing to buy it without much fuss, while maintaning my bracelet's value as how it was when I first bought it.

Liquidity also refers to how fast a company, in our example, Sy. Emas Jaya pay the value of my bracelet.

When BNM says they are having sufficient funds and does not have to inject liquidity in an economy, this means, the BNM has successful in maintaining its cash flow. This also means that the BNM is doing a good job in monitoring the short-term asset and short-term liabilities; i.e., positive balance.

To a bank, loan is translated as asset, while deposit is translated as liabilities. Investment portfolio (collection of investments) is a set of assets owned by a bank. When there is asset, obviously, it has the characteristic of the ability to be liquidated. When I have a lot of bracelets, it means, I am in the position to be able to liquidate my bracelets into cash (for eg). Therefore, these bracelets are my primary source of assets.

What if a bank experience a negative balance in their cash flow account ? It shows that, the liabilities are larger than the loan being lent. How can a bank correct the balance ? One, is through liquidating the investment portfolio. It means, bank sells a portion of its assets in the market to get cash. How can the liquidation help ? There are 2 ways: 1) The cash can help satisfy the deposit witdrawal (to reduce the liabilities) and 2) The cash is used to meet the loan demand (to increase the assets).

How to generate liquidity (read, how to get a lot of cash). A bank can a) sell their investment portfolios, b) sell the loan, c) borrow from other bank and d) raise additional capital. It is always a problem when a bank has problem to liquidate its asset, for example to meet the depositors' demand to withdraw the money. That is why, in this case, the bank must impose a minimum level of reserve to help out the bank in case of the crisis.