Abdul Rasheed Ghaffour: Connecting the dots - harnessing Islamic Finance to accelerate Sustainable Development Goal achievements Keynote address by Mr Abdul Rasheed Ghaffour, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the United Nations Development Programme (UNDP) Islamic Finance International Conference, virtual, 24 Feb 2022. * * * Assalamualaikum w.b.t and a very good afternoon, Ms Usha Rao-Monari, UN Under-SecretaryGeneral and Associate Administrator of UNDP, Datuk Syed Zaid Albar, Executive Chairman Securities Commission Malaysia, distinguished guests. Let me express my gratitude to the United Nations Development Programme (UNDP). Firstly, for inviting me to deliver the keynote address today; and secondly, for selecting Malaysia as the host for the inaugural Islamic Finance Thought Leadership Series. The theme C “ onnecting the Dots: Harnessing Islamic Finance to Accelerate SDGs Achievements” is a topic close to our heart. It also resonates very well with the vision and development priorities of Bank Negara Malaysia in the Financial Sector Blueprint which we released just last month. “In the midst of every crisis, lies great opportunity”. These words by the renowned Albert Einstein are indeed very apt. The COVID-19 pandemic offers a proverbial “reset button” for nations to rebuild the economy and society with greater resilience and preparedness. This means leveraging this moment towards building pathways for long term sustainability and inclusive growth with the seventeen SDGs as our guiding compass. This need is even more pressing now with 2030 SDG targets looming over the horizon and a financing gap of USD 4.5 trillion per annum1.

I see Islamic finance having a major role in plugging this gap. Most, if not all of the seventeen SDGs are aligned with the objectives of Shariah (M aqasid Shariah), making Islamic finance naturally advance and spearhead sustainability goals. This is the case in Malaysia, where sustainability objectives are materialised through the adoption of Value-based Intermediation or VBI practices. For a few years now, Islamic financial institutions have contributed significantly in pursuing sustainability efforts domestically. We also see many Islamic financial institutions helming sustainability efforts in their respective financial groups, both domestic and foreign. Collectively, the Islamic financial institutions in Malaysia have intermediated over RM155.6 billion2 in VBI-aligned initiatives over the past 3 years. Being a mature system today, Islamic finance is poised to scale up value-based finance solutions and continue to take the lead to create greater impact on the environment, economy and society. Allow me to share how we can make this a reality. First, is by harnessing the power of digitalisation. Technology may not be the silver bullet. But, it holds massive potential to revolutionise and transform the way value is delivered in finance. Studies show that an estimated 70% of new value to be created in the economy over the next decade will be based on digitally enabled platforms3, priming conditions for breakthrough innovation to perennial problems. I believe, with the right and responsible application, emerging technologies can amplify the impact of Islamic finance in meeting sustainability goals.