At this point, I would like to share with you an expression we frequently reiterated at the initial stage of the fight against inflation, which was supposed to be a tough and long-lasting process: “Even a thousand-year long journey starts with a single step4.”  Dear Guests, As I have mentioned before, derivatives markets are one of the components of economies that “ought to be present anyhow in the natural evolution of markets”, as put forward by Friedman. At this stage, I would like to draw your attention to the magnitude and significance of the functions performed and changes brought about in the economy by these markets, which were also evaluated within the framework of the experiences of other countries. The more informed we are about this subject, the more derivatives markets will be embraced and derivative instruments will become more widespread. Considering the three-dimensional nature of the functions of financial markets; time, risk and information, the time dimension creates risks concerning the future, whereas the information dimension facilitates more accurate decisions to be taken as the future can be predicted with fewer errors. Within this framework, the first function of derivates markets is to ensure the management of risks on a wide spectrum ranging from financial instruments such as foreign exchange rates and interest rates to commodity prices. The second function is to provide economic agents with correct information through the prices formed in the market.

While improving understanding is crucial, it also needs to be complemented with concrete actions that would improve the effectiveness of preventive and enforcement actions. For example, this could be done by incorporating and overlaying these insights into the transaction monitoring process and customer profiling. The implementation of the Financial Action Task Force (FATF) recommendations will allow more effective actions to be undertaken. Both aspects of compliance, that is, technical and effectiveness, are equally important. The philosophy behind the intended outcomes is the integrated manner in which countries should combat financial crimes. This would require cooperation from all parties involved and encompass the whole eco-system of combating financial crime: investigation, prosecution, conviction and confiscation. No stone should be left unturned. FATF in its 2015 evaluation, recognised Malaysia as having high technical compliance but called on Malaysia to ensure greater effectiveness in producing the desired outcomes of our system especially in the area of investigation, prosecution, and forfeiture of laundered properties. Understanding of new and emerging risks and having a comprehensive toolkit  2/5  BIS central bankers' speeches  My second point is the need to have a deep understanding of new and emerging risks and a comprehensive toolkit to effectively execute our shared responsibility to eradicate financial crime. All of you may have heard this many times, but it is worth restating that the rapid advancement in technology is a major running story for our age. While this presents wonderful opportunities for economic development, it also creates attendant risks and fresh set of challenges.