ank Negar Malaysia (the central bank, BNM) abandoned a fixed exchange-rate system in favour of a managed float against a trade-weighted basket of currencies in July 2005. Since then the Malaysian ringgit has appreciated against the US dollar in an orderly fashion. In 2006 the ringgit appreciated by 3.6% against the US dollar. Given the huge importance of exports to the Malaysian economy, the BNM is likely to maintain the current exchange rate system until such a time as the authorities consider the economy to be sufficiently diversified. The capital market is being reformed under a ten-year plan, which aims to speed up the development of the corporate bond market. A systemic crisis in the banking sector appears unlikely. Since the 1997/98 financial crisis, the authorities have reorganised and strengthened the financial system, clearing out non-performing loans in addition to tighter regulatory rules and supervision.