PETALING JAYA: An economist has backed a deputy minister’s concept for the central financial institution to print and distribute money to the individuals, describing it as “daring and out-of-the-box”.
Talking to FMT, Motion for Financial Justice chairman Ahamed Kameel Mydin Meera mentioned such a transfer was justified throughout a recession as liquidity ranges could be low.
He mentioned low liquidity would suppress demand and discourage new investments within the financial system, which might in flip have an effect on the flexibility of banks to problem new loans.
These components made it essential for the federal government to jumpstart the financial system.
He additionally mentioned money handouts would see cash injected into the financial system, growing the demand for items and providers. “This can absolutely assist companies and protect employment.”
Kameel mentioned Deputy Youth and Sports activities Minister Wan Ahmad Fayhsal’s concept was consistent with trendy financial idea.
“On this idea, the federal government can have no matter cash it wants for fiscal expenditures – with checks and balances put in place, in fact – and use taxation to regulate inflation.”
He acknowledged the argument that printing and distributing money would result in inflation and devalue the forex, however mentioned this may very well be prevented with prudent administration.
Geoffrey Williams of HELP College described the concept as “completely wise” and mentioned it was used within the type of quantitative easing after the Nice Despair within the Thirties, in Japan within the late Nineties, and after the worldwide monetary disaster of 2008.
He mentioned Malaysia might use it to pursue former prime minister Najib Razak’s proposal that the Workers Provident Fund (EPF) enable contributors to withdraw RM10,000 from their Account 1.
“The way in which this may work could be for EPF to promote a few of its holdings of Malaysian authorities securities (MGS) to Financial institution Negara, which may pay for them by printing new cash. This may then be distributed to EPF members via the i-Sinar programme.
“It might imply that EPF wouldn’t must liquidate equity-based belongings and so this may defend share costs and the inventory market.”
Williams believes that permitting the withdrawal of contributors’ present funds is just not a good suggestion on the whole.
“Quantitative easing to purchase MGS from monetary establishments is a greater various,” he mentioned.