KUALA LUMPUR (Oct 23): Bank Negara Malaysia (BNM) intends to extend its observation period for the Net Stable Funding Ratio (NSFR) for another year to 2020, according to its governor Datuk Nor Shamsiah Yunus.

"This takes into account the bank's intention to conduct further on-site assessments to validate the maturity and robustness of the liquidity and funding practices of banks, and uneven progress in implementation at the global level," she said in her speech at the Bank Negara Malaysia Financial Stability Conference here today.

According to Nor Shamsiah, the central bank is committed to implementing the NSFR requirements as part of overall liquidity standards applicable to licensed banks in Malaysia.

"At present, all banks maintain adequate liquidity buffers against short-term liquidity stress, and the vast majority of banks already report NSFR levels above the minimum 100% based on observation data," she said.

BNM had earlier said it plans to implement the NSFR after Jan 1, 2019.

Nor Shamsiah stressed the importance of vigilance, understanding risk transmission, policy agility and effective communication among authorities and regulators in overseeing the financial system and maintaining financial stability.

"Our challenge isn't just a question about where, but when a crisis is going to strike and how it will spread. And therefore when, how and with what instrument policymakers should act," she said.