[OR] [BDCB] [E1] [C6] Analysing Key Characteristics of the Brunei Darussalam Central Bank

Chapter 6

The Brunei Darussalam Central Bank

The purpose of this chapter is to provide readers with a clear understanding of the Brunei Darussalam Central Bank (BDCB) as an organisation, its mandate, and its unique operating environment.

Before embarking on the discussion of operational resilience, it is essential to recognise the institution’s core responsibilities, governance structures, and strategic priorities.

By mapping out these characteristics, readers will appreciate how the bank’s functions—ranging from monetary stability and financial supervision to payment system integrity and financial innovation—form the foundation upon which resilience must be built.

This chapter also seeks to highlight why operational resilience is integral to BDCB’s mission of safeguarding financial and economic stability in Brunei Darussalam.

By examining the bank’s regulatory frameworks, regional collaborations, and adaptive measures such as its FinTech initiatives and business continuity arrangements, readers will gain insight into how resilience is not an additional layer but an embedded capability within the organisation’s daily operations.

The objective is for readers to understand BDCB’s organisational identity and the operational realities it faces, preparing them to explore subsequent chapters that detail the practical implementation of resilience strategies.

Mandate, Foundation, and Organisational Identity

Establishment & Evolution

The Brunei Darussalam Central Bank (BDCB), originally known as the Autoriti Monetari Brunei Darussalam (AMBD), began operations on 1 January 2011

It succeeded the Brunei Currency and Monetary Board, consolidating monetary policy and financial supervision roles.

Core Objectives

BDCB’s mandate encompasses ensuring price stability, maintaining financial system stability via regulatory prudence, and developing efficient payment systems—all essential pillars supporting operational resilience

Currency Board & Currency Interchangeability

Brunei operates under a Currency Board Arrangement, with the Brunei dollar pegged at par to the Singapore dollar, overseen under the Currency Interchangeability Agreement (CIA). This mechanism ensures full reserve backing for domestic currency issuance, fostering confidence and exchange rate stability.

Prudential Supervision and Financial Stability Frameworks

Macroprudential and Supervisory Tools

BDCB employs Basel II standards, along with loan-to-value (LTV) and Total Debt Service Ratio (TDSR) limits to address household indebtedness

For systemic resilience, Domestic Systemically Important Banks (D-SIBs) face additional Higher Loss Absorbency (HLA) capital requirements. Transition to Basel III standards is underway between 2023 and 2024

Financial Soundness Indicators

As of Q1 2023, aggregate capital adequacy ratio (CAR) stood at a robust 21.3 %, with non-performing loans (NPLs) at 3.2 %, well surpassing regulatory minima.

Technological Adaptation and Collaborative Supervision

FinTech Regulatory Sandbox

Since 2017, BDCB has operated a FinTech Regulatory Sandbox to pilot and oversee digital financial innovations (e.g., cross-border remittance and digital onboarding) in controlled environments, enhancing the bank’s agility and responsiveness to new operational risks.

Interagency and Regional Cooperation

BDCB has deepened collaboration with Malaysia’s Financial Intelligence Unit (FIU), Australia’s AUSTRAC, and financial authorities across ASEAN to bolster intelligence-sharing and supervision

It also hosted ASEAN-level financial forums such as the ASEAN Working Committee on Payment and Settlement Systems (WC-PSS), co-chaired with BNM.

Bilateral MOUs with MAS and RPC Engagement

A series of Memoranda of Understanding (MoUs) with the Monetary Authority of Singapore (MAS) has established frameworks for banking and insurance supervision, cross-border collateral arrangements, and integration into regional payment connectivity efforts (Regional Payment Connectivity, RPC)

Operational and Business Continuity Preparedness

COVID-19 Response and Business Continuity Planning

The pandemic underscored BDCB’s organisational agility. Monitoring began as early as January 2020, with corporate Business Continuity Plans activated by mid-March.

Regulatory relief, fee waivers, and engagement with financial institutions helped preserve stability.

Adaptive Monetary Operations

During the pandemic, BDCB introduced standing facility rate adjustments and facilitated liquidity through its overnight facilities, ensuring effective monetary transmission despite constraints of the currency board regime.

Alignment with ISO 22316 and BDCB Operational Resilience Principles

ISO 22316 emphasises principles such as:

• Governance, Culture, and Leadership: BDCB’s governance underlines ethical stewardship and accountability; its crisis readiness reflects leadership foresight—tenets mirrored in ISO 22316.
• Risk Awareness and Proactive Continuity: Use of stress-testing, macroprudential tools, and pre-emptive BCP planning aligns with ISO guidance on anticipating and mitigating disruptions.
• Stakeholder Engagement & Collaboration: Regional collaboration (e.g., with MAS) and sandbox initiatives reflect robust stakeholder interaction and adaptive responsiveness.
• Capability Development & Adaptive Learning: BDCB’s technological sandbox, IPC planning, and payment systems resilience show a learning organisation embracing operational change.

BDCB’s operational resilience policy, while not publicly detailed here, similarly stresses strong governance, continuity planning, risk-based oversight, and technology integration—principles that BDCB practices reflect and BDCB endorses.

Summary Table: Operational Resilience Features of BDCB

Concluding Reflection

These Key Characteristics position BDCB as a central bank deeply committed to operational resilience—embracing robust governance, proactive risk management, cross-border collaboration, and adaptive operational systems.

This foundation sets the stage for deeper discussions on how BDCB operationalises resilience across its functions throughout the rest of this book.

Summing Up …

In summary, understanding the Brunei Darussalam Central Bank’s organisational context is the first step in appreciating how operational resilience is embedded into its mission and practice. 

BDCB’s unique characteristics—its role as a currency board authority, prudential regulator, innovator in financial technology, and collaborative regional partner—underscore the need for resilience frameworks that ensure continuity of critical functions under all conditions. 

These features reflect the bank’s commitment to ISO 22316 principles of resilience, including governance, stakeholder engagement, and adaptive capacity.

As the book progresses, this foundational knowledge will serve as a reference point for analysing how resilience is implemented across BDCB’s operations. 

Readers are encouraged to view resilience not only as a protective mechanism against disruption but as a strategic capability that enhances trust, confidence, and long-term sustainability in Brunei’s financial system. 

By starting with a firm grasp of BDCB’s key characteristics, we can more meaningfully explore how operational resilience is practised, measured, and continuously strengthened in the chapters ahead.

Operational Resilience in Practice: The Brunei Darussalam Central Bank Approach
Understanding Your Organisation: Brunei Darussalam Central Bank

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