At European level, the European Commission’s proposal for a Corporate Sustainability Reporting Directive (CSRD) is also a significant step forward in terms of improving the information available to market participants and supervisors. This initiative, still in the negotiation phase, revises and strengthens the sustainability reporting standards for companies operating in Europe and establishes mandatory sustainability reporting standards for more than 50,000 firms, including all large and listed firms, although simpler standards will apply to listed SMEs.14 In January this year, the EBA published disclosure standards for environmental, social and governance (ESG) risks. These provide the basis for publication by the European banking sector of comparable quantitative information on how climate change risks affect their balance sheets. Compliance with these standards will undoubtedly require a significant effort on the part of banks, which ultimately depend on the information available on their counterparties. As a result, the EBA has introduced certain transitional features in the standards to facilitate the adaptation process. In any event, providing this information to the market will encourage banks to improve their information systems and databases. Moreover, improving public information will ultimately enhance the ability of financial market participants to discriminate. The BCBS is playing a notable role globally. In November 2021 it publicly communicated its support for the creation of the ISSB.15 At the same time it indicated its intention to explore in parallel how to use the bank disclosure framework (Pillar 3) to promote a common disclosure baseline for climate-related financial risks across internationally active banks.

Domestic demand is expected to become a major driver of growth as the private sector benefits from the strong macroeconomic fundamentals, healthy balance sheet position and a resilient financial system. Both fiscal and monetary policies are aimed at providing an enabling environment for sustainable growth. Monetary policy will remain supportive of growth, while attention will continue to be focused on ensuring that the private sector, in particular SMEs, have access to financing. In addition, the Central Bank is now in the process of formulating a new financial sector blueprint to chart the development of the Malaysian financial sector over the next decade so that the financial sector will reinforce transition of the Malaysian economy into a high value-added and high income economy. BIS Review 43/2010  3  As the Malaysian economy is gathering strength, the focus of policy has also shifted towards laying the foundations for the economy into a high value-added, high income economy. In this regard, the Government has recently announced the New Economic Model, which is intended to accelerate Malaysia’s development into a high income economy by 2020. The broad thrust of the strategies is to re-energise the private sector to drive growth. This involves providing an enabling environment in which high productivity, competitiveness and innovation can take place. As part of these initiatives, further liberalisation of the economy and the privatisation of selected Government-owned corporations are undertaken. This is also accompanied by the Government Transformation Program to enhance the public sector’s efficiency.