These are liable to result in a negative overall yield in about three out of ten years. Due to this fluctuation risk, but mainly because of the currency reserves required for the conduct of monetary policy, the National Bank has to rely on adequate provisions. Part of the earnings are to be allocated to provisions in order to enable these to grow in step with the Swiss economy. The remainder is available for distribution to the Confederation and the cantons. Currently, the provisions are well funded. Due in part to the high yields on foreign exchange reserves in the last few years, provisions exceeded the level aimed at by around Sfr 13 billion at the end of 2001. This cushion makes it possible to increase the distribution to the Confederation and the cantons over the next eleven years as agreed. With a view to the future, various decisions relating to investment strategy are beginning to take shape, aside from the transfer of the free assets. Based on the consultation procedure it is becoming clear that the revision of the National Bank Law will again extend the leeway for investment. Particular attention is devoted to corporate bonds, a significant investment segment. Moreover, it must be examined whether and to what extent equities can improve the risk/return features of monetary assets in a meaningful way. In addition, the allocation of monetary assets to the various investment sectors must be optimised on an ongoing basis. Such questions are studied and clarified internally.

The revisions also aim to better support the development of domestic expertise and capacity in core functions of the banking industry. Third, a shared security operations centre for the financial industry (FINSOC) will be established in coordination with the industry to support the continuous and proactive monitoring of cyber threats. Finally, by 2018, we hope to operationalise an industry-wide implementation of e-KYC for the on-boarding of customers. Further progress has also been made on the development of the policy framework for domestic systemically important banks (D-SIBs). Survey results collected from banking institutions and financial holding companies earlier this year are currently being analysed and will facilitate further refinements to the assessment methodology to identify D-SIBs. This will form part of the D-SIB policy framework which will be released later this year for industry consultation. Beyond the immediate term, the Bank is also looking at introducing enhanced standards on measuring capital requirements and outline expectations on recovery planning, in line with global reforms. In doing so, we will engage the industry on the potential domestic implications, and make adjustments where necessary to ensure that these standards are phased-in seamlessly. A World of Contrasts: Shifting From Macro Masterplans to Micro-Cellular Transformation Malaysia’s transition to a high-income economy will require careful attention to the context in which policies are developed and pursued. In particular, behavioral changes shape the way people live and work. Thanks to globalisation and digitalisation, individuals are much freer to dictate their living, working and financing arrangements.