Currently, we can see how much people are concerned about increased inflation and low deposit rates. We need to bring inflation back to 4% in order to ensure better life quality for people. Our analysis shows that this is possible without creating any constraints for economic recovery. From monetary policy, let’s proceed to the situation in the banking sector and lending growth. Last year, the banking sector was capable of providing substantial support to the economy. 2/6  BIS central bankers' speeches  I have also said this multiple times: this is the resolution and improvement of the banking sector which enabled banks to maintain their stability and restructure loans, simultaneously expanding lending. If we had not removed persistently unstable banks from the market, if banks had continued to conceal bad assets on their balance sheets, if we had not counteracted risk concentration on business owners and the concentration of risks in general, I assure you that we would have faced a totally different situation. Banks would have failed to become a source of support for households and businesses and, instead, would have needed aid themselves, as during the 2009 and 2014–2015 crises. Conversely, this time, banks were extensively restructuring loans, making concessions to their borrowers, and the total amount of such restructured loans, or actually financial aid, reached seven trillion rubles. Moreover, banks managed to maintain their capital cushion at six trillion rubles. In other words, we did not even approach the threshold of the system’s safety. The banking system remained entirely stable and robust.

To date, more than 14,000 SMEs have registered in the SME Business Directory of the Portal. In strengthening the financial infrastructure for SMEs, Bank Negara Malaysia has also established the Small Debt Resolution Scheme where viable SMEs that are constrained by non-performing loans are assisted through loan restructuring and the provision of additional funding. In addition, through EXIM Bank, two new trade financing products for SMEs have been introduced in 2006. The Census that was completed in 2005 had however, indicated that about 80% of SMEs are micro enterprises which had limited access to financing from the formal financial system to maintain and expand their businesses. To meet the financing needs of this key segment of the SMEs, microfinancing has now been established in our financial system. A number of financial institutions are participating in providing fast, flexible and convenient access to financing to individuals and micro enterprises for their business activities. The various measures that have been undertaken have now already yielded positive results. SMEs today have had greater access to financing, with the banking institutions being the main source of financing. In 2006, RM40 billion in new loans was approved to more than 84,000 SME accounts. Of this, the Islamic banking institutions provided RM5 billion in new financing, compared with RM3 billion in 2005. The share of SME loans of the banking institutions has increased from 30% of total business loans at end-1999 to 45% at end-2006. Total SME outstanding loans of the banking institutions have now breached the RM100 billion level in 2006.