Whether our Central Bank is a private bank? - 2009/05/17 08:57Central Bank of Malaysia Act 1958 - 519 Revised 1994
Section 6. (1) The authorized capital of the Bank shall be two hundred million ringgit.
Section 6. (2) Twenty million ringgit of the authorized capital shall be subscribed and paid up by the Government on the establishment of the Bank.
The Act only reveals the minority stockholder (i.e. the Government) and provides no information on the majority stockholders.
Question now arises as to whether our central bank is a private institution, which our government is the minority stockholder? Is this the price of our independence? Are these majority shareholders has the power to control the inflation and deflation of our currencies, i.e. by controlling the supply and demand of our monies? If it is private, why it is not subjected to taxes? If they are private banks, where did they get so much money to give loans to our government? Are they printed the money out of thin air?
Please comment and share your personal knowledge on the subject by replying to this post. Thank you. [/b]
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Noorul Haida bt Ismail
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Posts: 13
Re:Whether our Central Bank is a private bank? - 2009/05/21 04:33Panama has no central bank
In this modern, post–Bretton Woods world of “monetary order” and coordinated central-bank inflation, many who are otherwise sympathetic to the arguments against central banks believe that the elimination of central banking is an unattainable, utopian dream.
For a real-world example of how a system of market-chosen monetary policy would work in the absence of a central bank, one need not look to the past; the example exists in present-day Central America, in the Republic of Panama, a country that has lived without a central bank since its independence, with a very successful and stable macroeconomic environment.
The absence of a central bank in Panama has created a completely market-driven money supply. Panama’s market has also chosen the US dollar as its de facto currency. The country must buy or obtain their dollars by producing or exporting real goods or services; it cannot create money out of thin air. In this way, at least, the system is similar to the old gold standard. Annual inflation in the past 20 years has averaged 1% and there have been years with price deflation, as well: 1986, 1989, and 2003.
Panamanian inflation is usually between 1 and 3 points lower than US inflation; it is caused mostly by the Federal Reserve’s effect on world prices. This market-driven system has created an extremely stable macroeconomic environment. Panama is the only country in Latin America that has not experienced a financial collapse or a currency crisis since its independence.
cont. via the Ludwig von Mises Institute
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