Priority 4: Empowerment through consumer protection and education The fourth area relates to the greater empowerment of consumers through consumer protection and education. Both the financial service industry and the financial consumers have an important respective role for financial inclusion to transition to a higher level. Financial inclusion is best achieved when consumers are assured of fair treatment. In developing financial products by the service providers, of great importance is their professional and ethical conduct. Here, the role of the Board and senior management of such financial service providers need to set the right culture, policies and incentive systems that support fair and responsible business practices. Policies that promote responsible market conduct that is reinforced by transparent disclosure requirements will be important in advancing responsible financial inclusion. A key aspect of a successful financial inclusion agenda is also building financial capability of consumers so that they can meaningfully participate in the financial system. Financial education, as with other forms of education, is a powerful agent of empowerment. It empowers consumers with the knowledge, skills and tools to build, manage and protect their personal wealth. In Malaysia, efforts to systematically build financial capability among the population began almost twenty years ago, in 1996, when a National Savings Promotion Campaign was launched to enhance awareness on the importance of savings, including among school children. Since then, a more holistic and comprehensive consumer financial education programme for both children and adults has been implemented for more effective participation in the financial in the financial system.

12 Member States have decided to impose a positive rate on the countercyclical buffer.7 The ESRB has likewise taken action. In 2016, it issued warnings to eight countries, drawing attention to medium-term vulnerabilities in the residential real estate sectors. In six of these countries, the ESRB judges that the vulnerabilities have not been sufficiently addressed and on Monday published recommendations setting out remedial action to be taken.8 Five further countries were issued with warnings.9  Areas for further progress in macroprudential policy Yet the overall framework for macroprudential policy in Europe remains incomplete. We need progress in three key areas to counter systemic risk more effectively: better analytical tools, new instruments that counter the development of risk outside the banking sector and a clearer framework to govern policy actions. The past decade has seen a sustained improvement in the tools available to assess risks to financial stability. Better data and better modelling techniques have revealed important insights. Developing the analytical toolkit to adequately monitor interconnectedness and contagion requires granular datasets, and the ability to map and link data across entities and markets. The sub-prime crisis in the US banking sector spread to European banks through their direct exposures, but it also spread to insurers through the use of credit default swaps.10 Only a holistic view of the system will allow potential contagion channels to be identified and modelled. And that requires investing in new technologies for data analytics and enhancing the capacity for authorities to link and share data and technical knowledge.