This, in the banking world, is a term of art with carefully limited definitions. Thus the Bank Negara of Malaysia will be influenced if not guided by what the BIS (the Central Bank of Central Banks), treats as moral hazard.
That would be the case whoever might be the Chairman of Bank Negara. At present that is a professional banker, but only because the Prime Minister, also the Finance Minister, was not able to put his puppet placeman in the job. None the less most government officials in Malaysia, and the Chairman is one such, either do his bidding or they go-whether to retirement or disgrace or worse depends on Najib’s whim and the perceived degree of offence.
The Chairman’s main security blanket is that open interference by Najib in the Bank’s affairs and policy could unsettle the international money markets and make the ringgit a pariah currency. That would not affect Najib’s huge personal funds since these have long been parked abroad. But it could and would affect Malaysia’s stability and acceptance internationally which could and would bring him down.
What the BIS do is to oversee world banking to detect and put an end to any large scale financial irregularity in member countries. It might blench at doing that to,say, the USA or Russia but Malaysia?
One of the things that the international financial community in general, and the BIS in particular,can do to smaller fish is to demonstrate its capabiities. An action that would burnish its international image.
So let the BIS send inspectors to Bank Negara to carry out a meticulous audit of its situation and past actions to ensure that they conform to BIS standards. They do not of course but to establish that requires an enqiry. It cannot be started too soon if an embarrassing crash of the Malaysian currency is to be avoided. If that happened fingers would be burned not just in Kuala Lumpur but In London and elsewhere too!