Finally, Asia is diverse – across stages of economic development, and across a variety of climate related risks and transition challenges. If we can successfully help Asia transition to net zero, it will go a long way in getting the world to net zero. Third, Collaboration – effective transition finance needs close partnership among the public, private, and people sectors. This will be the focus of our conference – scaling blended finance to accelerate the net-zero transition. Blended finance synergises public and private capital to mobilise financing for projects that are marginally bankable. It is also about combining financing with capacity building, technology transfer, and institutional support, to reduce risk and enhance bankability. In short, it is about taking an ecosystem approach to solving a problem of the global commons. Blended finance is not new but catalysing and scaling it requires a fresh approach. The use of public funds and development guarantees to reduce risks and encourage participation by private capital has been around for many decades. But such programmes are too few and too small. Globally, annual flows of blended finance have averaged less than $ billion since 2015. We need a more systematic and coordinated approach to mainstream blended finance. First, we need to build a pipeline of shovel-ready transition projects. There is insufficient capacity and expertise to prepare projects that are attractive to the private  2/4  BIS - Central bankers' speeches  sector.

The role of the Shariah board in ensuring that all aspects of business operation of Islamic financial institutions are in accordance with the Shariah principles, adds another level of oversight which inherently safeguards against irresponsible practices. Embraced in its entirety, these in-built dimensions of governance and risk management contributes to safeguarding Islamic finance from the potential risks of financial stress arising from excessive leverage or speculative activities. Despite the uncertainties and challenging environment posed by the current crisis, the expansion and development of Islamic financial services industry in global financial system have continued unabated. The dynamic nature of the Islamic financial system is reflected by its solid growth, the increased range of financial products and services and the establishment of new Islamic financial service providers from the different parts of the world including from the non-Muslim world. This increased participation is particularly pronounced in the sukuk market whereby funds have been raised by issuers from various parts of the world. Recent sukuk issuances both in domestic and in foreign currency have attracted interest from a wide investor base from Asia, Europe and the Middle East. These positive developments have been achieved despite the more challenging global financial market environment. As Islamic finance evolves to meet the changing requirements of businesses and consumers, innovation is integral to the development of new Islamic financial products and services. It is also recognised, however, that unfettered financial innovation can become a major source of instability in the financial system.