Brunei

Brunei had had a currency board arrangement since 1967 (with a peg to the Singapore dollar) which precluded any significant domestic monetary policy, and this continued with little change until 2013, when the central bank which had recently replaced the currency board began to operate some interest rate controls.

Years

Targets and attainment

Classification

1974-2012

Brunei dollar is pegged at par to Singapore dollar under currency board arrangement dating back to 1967 (which originally included Malaysia), with each country’s central and commercial banks freely accepting each other’s currency at par and with no charge (customary but not legal tender); the Brunei Currency Board (BCB) operates no monetary instruments, has no lender of last resort capability, and does not act as banker to government or to banks, while finance ministry operates only minimal supervision of (mainly foreign) banks; late 1995 reserve requirement introduced, for prudential reasons; ideas for broadening scope of BCB discussed late 1990s then put aside; 2000 Brunei International Financial Centre initiated; moves to encourage Islamic financing; 2004 Brunei Currency and Monetary Board replaces BCB, with aim of increasing forex coverage from 70 to 100% and with possibility of larger role in future; 2006 plan for deeper financial sector reform, including new central bank (which will retain currency board arrangement but take over and improve financial supervision and payments systems) and development of domestic capital market (especially via Islamic instruments); new monetary authority AMBD and new deposit protection scheme (plus asset maintenance ratio for banks) start operations 2011, 2012 credit information bureau set up; statistical database poor, especially but not only on government’s foreign investments, but improvements from 2000s

pure currency board PCB

2013-17

2013 some interest rate controls designed to increase domestic lending, later reduced or removed; continuing emphasis on financial sector reform; statistical database better but scope for further improvement

augmented currency board ACB

Selected IMF references (Brunei became a member of the IMF only in 1995; Staff Reports for 2016, 2017 and 2018 not available): RED 1996 pp20-3, 30, 70; SR 1996 pp13, 15; SR 1997 pp14, 16-17; RED 1998 pp28-31; SR 1998 pp12-14; SR 2001 pp13-14; SR 2004 pp12-13; SISA 2006 pp3-13; SR 2011 pp11-12; SR 2012 pp10-12, 18; SR 2014 pp9-11; SR 2015 pp12-13; SR 2019 pp12-14

Other references: Monetary Authority of Singapore (2017).

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