South-east Asian central banks will power integration

Subject

Central banks in South-east Asia.

Significance

Muhammad Ibrahim succeeded Zeti Akhtar Aziz as Malaysia's central bank governor on May 1; he was deputy governor from 2010. The government has thus undercut concerns that its choice would be politically motivated at a time of weakening economic growth and 1Malaysia Development Berhad (1MDB) investment fund-related problems. This leadership transition raises broader questions of institutional capacity among central banks in the other ASEAN core economies as the region integrates financially.

Impacts

• Muhammad Ibrahim's appointment will likely further strengthen the Malaysian central bank's independence.
• In Indonesia, political pressure by the administration and parliament on Bank Indonesia will gradually erode its independence.
• Military pressure on the Bank of Thailand is likely to grow.