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Monetary Policy Framework
Monetary Policy Framework
Brunei Darussalam's monetary system is based on the Currency Board Arrangement, which is underpinned by the Currency Interchangeability Agreement (CIA) between Brunei Darussalam and Singapore.
Currency Board Arrangement
Under pegged exchange rate systems, currency boards back up the total amount of currency issued in the economy with an equivalent amount held in reserves of the currency board. In Brunei Darussalam, the local currency is pegged to the Singapore dollar at par.
Under the Currency Order, 2004, only BDCB is allowed to issue Brunei notes and coins. Additionally, the Currency Order, 2004, also requires us to back up every note and coin issued. This is to ensure confidence and stability in the Brunei dollars, and hence, eases trade and investment.
In addition, this means the Singapore dollar anchors the Brunei dollar, and Singapore's monetary policy has a direct influence on monetary conditions in Brunei Darussalam. Singapore uses the exchange rate as its monetary policy tool. The longstanding monetary policy framework based on the Currency Interchangeability Agreement, has been beneficial for macroeconomic stability
Inflation in Brunei Darussalam has also been low and stable, averaging 1.1% over 1981 to 2023.
Source
IMF Statistics（https://www.imf.org/en/Countries/BRN）