Malaysia Turns Again to the Indispensable Zeti

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Euromoney, September 16 2019

After the challenges of Asian and global financial crises and the 1MDB scandal, Zeti Akhtar Aziz is back in the top echelons of Malaysian influence again. She tells Euromoney about her achievements as central bank governor – and what she knew and did about 1MDB.

This is an excerpt. Read the full article here:

Zeti Akhtar Aziz spent two decades at the highest levels of central banking, two decades that, more often than not, coincided with the worst possible circumstances.

Her tenure was bookended by the Asian financial crisis when she became acting governor of Bank Negara Malaysia (BNM) on 24 hours’ notice in August 1998, following the resignation of both the existing governor and his deputy; and the 1MDB scandal, during which she found herself pitted against the prime minister, attorney general and much of the power of the state.

“I’ve been right in the middle of everything quite a few times,” she says.

Today, she is talking to Euromoney in rather less stressful circumstances. She is running Permodalan Nasional Berhad (PNB), a government-linked investment company, and our interview takes place in its offices in a sprawling building complex in Kuala Lumpur.

Zeti greets Euromoney warmly; this is, we estimate, about the 12th time we have spoken for interview over the course of 20 years.

But something is different today and it’s not just the relatively reduced burden of her role.

Over the years Zeti has been a highly respected central banker, but she has always been cautious, reserved, considered. She has always had interesting things to say from a technical point of view, with a level of understanding of international finance that would be at home in the highest levels of academia, but she could rarely be accused of a punchy one-liner.

Today, however, she is as open and free-speaking as we have ever known her. And, among other things, she wants to get some of her side of the story of 1MDB across. The trial of former prime minister Najib Razak means there’s only a certain amount of ground she can cover, but she does want it known how BNM, and she personally, responded to 1MDB when it first arose. She worked very hard to build a legacy and doesn’t want 1MDB to be it.

The 1MDB affair has been the region’s landmark scandal of the 21st century to date, but it took time to unfold.

“We knew about 1MDB quite early on, because any entity that has accumulated a debt that’s beyond RM2 billion ($474 million) would come onto our radar screen,” she says.

BNM is one of the few central banks to have not only a monetary policy committee but also a financial stability committee, which meets every quarter to discuss the risks to the financial system. The bank was also one of the first to attempt stress testing – a sense of prudence that came from surviving the Asian financial crisis.

“One of the important lessons was to also build resilience to any imminent financial crises,” she says, “and to do that, one needs to know all the risks of anything that could go wrong.”

Read the rest of the article here:

Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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