CURRENCY, CREDITS, MONETARY POLICY AND THE ECONOMIC DEVELOPMENT IN BRUNEI DARUSSALAM

Abstract

The Brunei economy is heavily dependent on oil and gas as a major source of income. However, the government realises that there is a need to diversify the economy through industrialisation and promotion of the private sectors, especially the service sector (banking and finance), to lead economic growth, as stated in both the fifth (1986-1990) and the sixth (1991-1995) National Development Plans (NDPs). ln view of the economic diversification plan, therefore, the main of objective of this dissertation is to examine the impact of the currency interchangeability agreement between Brunei Darussalam and Singapore, the financial development and the prospect of the setting up of a central monetary authority, since there is none in the country.

The currency interchangeability agreement between Brunei and Singapore has been in existence for over two decades, since 1973. However, there is not much work or literature being done regarding the costs and benefits, and implications of the currency agreement from the Brunei perspective. Therefore, the dissertation tries lo Jill in these gaps. In addition, a consideration of which exchange rate regime to be adopted by Brunei Darussalam is also being suggested, if there is a currency split between the Brunei and Singapore dollar. Given the data constraints, limited literature regarding the above issues and the broadness of the topic, the dissertation mainly focuses on the currency interchangeability agreement and financial institutions in the country, particularly commercial banks.