Zeti plays down Chinese problems at 2016 Central Banking Awards

Lifetime achievement recipient discusses monetary policy ‘over-reliance' and gender in fireside chat with editor-in-chief Christopher Jeffery

Bank Negara Malaysia governor Zeti Akhtar Aziz played down the likelihood of an impending economic ‘hard landing' in China during an interview with Central Banking last night (March 3). The country's "financial markets correction doesn't reflect the underlying fundamentals", she said.

"What is happening in [China's] financial markets is not in any way near [developments in] other crisis countries," Zeti told an audience in London. She cited the country's current account surplus, low foreign debt and "quite sound" banking sector. 

The comments were made during the 2016 Central Banking Award ceremony at the Waldorf Hilton, which saw Zeti collect the Lifetime Achievement Award.

Zeti, a self-described proponent of Asia as a global economic force, and an early champion of greater regional integration, has voiced optimism about China's rise previously.

The slowest growth rate in a generation, compounded by a stock market rout, record capital outflows and exchange rate pressures appear to have done little to diminish that bullishness.

"[China has] policies in place to re-balance their economy and they're starting off from [a] growth position," Zeti noted. "Their markets are also more segmented [than in the West] and therefore you're not going to have this interconnected cascading [destabilising] their financial system."

Zeti added she remained "optimistic" the recent market turbulence reflected the "adjustments and re-balancing that [China has] initiated, including financial reforms".

"It will make for stronger foundations on which they will have a more sustainable performance," she said. Zeti, who retires as governor of Bank Negara next month after 16 years in office, expounded on a range of topics during the interview.

Among other things, she warned against an "over-reliance" on monetary policy globally and tried to dispel myths about Islamic finance, pointing out that a majority of users are in fact non-muslim.

The governor was also applauded for the large increase in female staff during her reign at the central bank, which she maintained was not a planned effort.

"I have never looked at the gender issue, I have to say," Zeti said. "When I was part of senior management, I was the only [woman], but now 40% of my [senior] management are women."

Instead, she described the closing of the gender gap as a lucky side-effect of efforts to turn Bank Negara into a more effective institution.

"We recognised [following the Asian crisis in the late 1990s] that not only did we have to transform and reinvent the financial sector, but the bank itself," Zeti said.

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Zeti discusses capacity building: play video

"Everyone has to have an input for [whatever] outcome the bank wanted to achieve, whether it was financial stability or to strengthen financial inter-mediation or monetary stability," she added.

"All I did was give the opportunity for people to improve themselves and everybody took advantage of it, including the women," she continued. "Investing in people has been vital".

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