These scenarios are plausible representations of the future consequences of climate change depending on the severity of the physical damage and the speed and effectiveness of the policies rolled out globally to support the transition to a sustainable economy. Specifically, an extreme scenario is defined, based on the assumption that no measures are taken to mitigate climate change, which would naturally entail materialisation of the physical risks. An alternative scenario involves an orderly transition, in which the measures necessary to reduce the volume of CO2 emissions in accordance with the Paris Agreement are taken promptly and progressively. As the measures are introduced gradually, the physical and transition risks are considerably reduced. Disorderly transition is a third scenario, under which measures to combat climate change are not taken until a relatively late stage, so that it is necessary to reduce emissions to a greater extent than under the orderly transition scenario in order to achieve the same emission reduction target. As a result, the transition risks increase. A growing number of central banks and financial supervisors have begun to carry out climate change stress tests, making use of these scenarios, adapted as necessary to reflect the specific features of each economy. In September 2021, the results of the ECB’s stress tests were published. They covered approximately 4 million companies worldwide and 1,600 consolidated banking groups in the euro area and incorporated the impact of both physical and transition risks over a 30year period.

Nor Shamsiah Mohd Yunus: Welcoming remarks - BNM Sasana Symposium 2023 Welcoming remarks by Ms Nor Shamsiah Mohd Yunus, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the BNM Sasana Symposium 2023, Kuala Lumpur, 8 June 2023. *** Distinguished guests, central bank officials and payment system operators from Indonesia, Singapore, and Thailand, ladies and gentlemen. Assalamualaikum warahmatullahi wabarakatuh and good morning. Welcome to the inaugural BNM Sasana Symposium! Every year, in March, Bank Negara Malaysia publishes our Annual Report, along with the Economic and Monetary Review, and the biannual Financial Stability Review. We also publish our Quarterly Bulletins. These reports describe how we have discharged our mandates over the past year, and provide our thinking, analyses and assessments on the economy and financial system. In the reports, we also discuss important ideas and pressing issues affecting the economy and financial sector in feature articles that help inform and shape long-term initiatives that are necessary to strengthen our economic fundamentals. One of the ways we hold ourselves accountable to the rakyat through our flagship publications is by explaining the key considerations behind the decisions and measures that we take, and the priorities that guide our work. Often, this involves complex policy trade-offs that have to be carefully balanced from many angles. Our reports, as well as any communications from us, such as our Monetary Policy Statements, often generate lively conversations all around the country – in the press, on social media, and at the dinner table.