KUALA LUMPUR: The Central Bank of Malaysia Act 2009 came into force yesterday, giving Bank Negara Malaysia (BNM) a more effective role in managing risks and challenges.

In a statement yesterday, BNM said with the Act in force, the Central Bank of Malaysia Act 1958 had ceased to apply.

It said the new Act provides greater clarity on the central bank's mandate and vests it with the necessary powers and instruments to achieve this mandate, which includes the formulation of the monetary policy by the Monetary Policy Committee (MPC).

"The Act stipulates that monetary policy is to be autonomously formulated by the MPC and effectively implemented by BNM.

"Adequate safeguards have been incorporated in the Act with respect to the membership of the MPC, the decision-making framework and requirements for transparency, disclosure and accountability," the central bank said.

BNM said the more integrated and globalised economic and financial environment had presented new challenges for the central bank in its role of preserving financial stability.

Hence, specific powers for macro-prudential financial stability, which to date has not been a common feature of traditional central banking legislation, are now included in the Act.

Consistent with the goal to promote Malaysia as an international centre for Islamic finance, the Act also provides for an enhanced role for the Syariah Advisory Council on Islamic Finance to facilitate consistent application of Islamic law on Islamic financial matters.