volatility of earnings has not changed much relative to capital. hedge funds, private equity funds and other leveraged financial institutions control increasingly large shares of aggregate financial capital and play very active roles in many asset markets and in credit markets. although assets under management in hedge funds still represent a relatively small share of total financial assets, their relative share has increased significantly and their ability to take on substantial leverage magnifies their potential impact on financial market conditions. these private leveraged funds have become an important source of protection to regulated institutions by being large sellers of credit insurance in the rapidly growing market for credit default swaps. in terms of enhancing overall market efficiency, the growth of these private leveraged institutions can be expected to provide benefits in terms of improved liquidity, price discovery via arbitrage, diversity of opinion and diversification opportunities for investors. the increase in the share of assets managed by private pools of capital devoted to arbitrage activity should improve the overall functioning of markets. in most circumstances, increased trading and participation contributes to market liquidity and makes markets less volatile. the ultimate benefit should be lower risks for all market participants. this in turn should reduce the risk premia associated with holding financial assets, and ultimately reduce the cost of capital. the rapid growth in the relative importance of these leveraged financial institutions has been accompanied by a number of structural changes as well. the total number of funds has grown dramatically. there are more very large hedge funds and private equity firms. greater institutionalization, and the maturity of risk management and operational infrastructure in the largest of these private funds, has likely reduced operational risk. to the extent these changes have increased the diversity of firms and strategies in this part of the financial system, and this is hard to measure with any confidence, this heterogeneity should provide diversification opportunities, foster more efficient price discovery and could help improve stability. these changes in market participants have occurred in conjunction with a dramatic acceleration in number and type of derivative instruments. these developments have likely had the important impact of allowing for a more efficient distribution and more effective management of risk. all of these changes should move the market in the direction of fostering the efficient allocation of credit and capital formation, and thus enhancing the economy ’ s real growth potential. the available evidence is consistent with the view that the changes in the core of supervised institutions, growth of the leveraged sector and rapid financial innovation have strengthened the efficiency and resiliency of the overall financial system. as i mentioned at

, malaysia also issued the world's first usd - denominated sovereign sustainability sukuk in 2021. meanwhile, bursa malaysia has launched " bursa carbon exchange ", the world's first shariah - compliant voluntary carbon exchange. through trading of high - quality carbon credits, this helps businesses meet climate targets in the near term, while more practical solutions are taken to decarbonise their operations. 2 / 4 bis - central bankers'speeches malaysia recognises the need for a cohesive and coordinated approach in responding to the climate challenge. that is why in 2019, we launched the joint committee on climate change or jc3 to serve as the main focal point for spearheading the financial sector's response to the climate agenda. the jc3 is jointly chaired by the bnm and sc. its members include the stock exchange, industry players and relevant experts. through collaborative partnerships, the jc3 is driving change across pivotal facets of the economy, providing tools, resources, and advocacy for climate action. this includes efforts to bridge climate data gaps, innovative pilots to scale up transition and adaptation finance, and capacity building to support smes in transition. more details on these and other initiatives pursued by the jc3 can be found at www. jc3malaysia. com. i am also heartened by the growing focus and concrete climate actions taken by financial institutions in malaysia. to date, the industry's financial commitment stands at over usd43 billion for esg purposes. indeed, by 2026, we expect to see at least half of new financing by our banks aligned with climate - supporting or transitioning activities. that said, malaysia cannot do this on its own. as stated in the netr, the government anticipates that malaysia will require investments of about usd280 billion by 2050 to meet our energy transition needs. the sessions at this pavilion today are not just about what the malaysian financial sector is doing to finance our own climate journey. it is also about the many opportunities open for financial institutions, investors, businesses and other entities from all over the world to join or partner with us on our journey – be it to contribute or mobilise capital and technology ; to share expertise ; or even to participate in the conversation to share your ideas. our aspiration is for the malaysian financial sector to play a key, vibrant role in mobilising capital to address the enormous climate financing needs of the world at large that is estimated at usd275