By Yantoultra Ngui 

PUTRAJAYA, Malaysia--Malaysia named Nor Shamsiah Mohd Yunus, a former central-bank official involved in an investigation into state-investment fund 1Malaysia Development Bhd., as governor of Bank Negara Malaysia.

The appointment Friday confirms a Wall Street Journal report that Ms. Nor Shamsiah would replace Muhammad Ibrahim, who resigned from the central bank earlier this month. He left following revelations that some $500 million used to buy land from the Finance Ministry was subsequently used to pay down 1MDB's debt load.

Ms. Nor Shamsiah's return to the central bank follows a series of investigations into 1MDB after former Prime Minister Najib Razak was voted out last month in national elections and was replaced by 92-year-old Mahathir Mohamad, whose opposition alliance campaigned hard on the 1MDB scandal.

Mr. Najib launched 1MDB in 2009 to stimulate investment in Malaysia, but it quickly racked up $8 billion in debt. U.S. authorities allege that at least $4.5 billion was stolen from the fund. In civil suits, the U.S. Department of Justice said $681 million was transferred into the personal accounts of Mr. Najib, who was identified as Malaysian Official Number 1. Mr. Najib and 1MDB deny any wrongdoing.

Ms. Nor Shamsiah's five-year term begins July 1, Finance Minister Lim Guan Eng said.

"Bank Negara Malaysia will continue to focus on delivering its mandate of maintaining monetary and financial stability in the best interest of the nation," Ms. Nor Shamsiah said Friday.

Ms. Nor Shamsiah joined the central bank in 1987 and was appointed deputy governor in 2010, a position she left when her term ended in November 2016. She was mainly involved in overseeing the health of the banking sector.

Ms. Nor Shamsiah was involved in the central bank's inquiry into 1MDB in 2015 before her direct supervisor, Gov. Zeti Akhtar Aziz, was replaced by Mr. Muhammad. The central bank recommended at the time that the attorney general's office file criminal charges against 1MDB alleging that it gave inaccurate information regarding the investment of $1.83 billion outside the country from 2009 to 2011.

The attorney general at the time declined, saying Bank Negara Malaysia had supplied insufficient evidence.

Nomura Research said Ms. Nor Shamsiah's appointment implies "continuity in the direction and conduct of monetary policy," adding that it expects the central bank to leave the policy rate unchanged at 3.25% for the rest of the year.

Write to Yantoultra Ngui at yantoultra.ngui@wsj.com

(END) Dow Jones Newswires

June 22, 2018 05:11 ET (09:11 GMT)