nuclear armageddon. it would seem extreme to do so now, but maybe in the 1950s it wouldn ’ t have been perceived as such a tail event. to take perhaps a more relevant recent example : in the us, financial institutions, credit rating agencies and investors stress tested their mortgage portfolios and mortgage - backed securities. however, the stress test was derived from the history of house prices in the us. that history suggested that cities in the us had their own price cycles and that the correlations across markets were not particularly strong. periods of large house price decline were confined to a few idiosyncratic events in a few cities. one could obviously have stressed the mortgages assuming some moderate nationwide house price decline. 7 and indeed a number of the aaa - rated securities would not have maintained their rating under that scenario. but given the history prior to 2007, would a stress test of a nationwide 20 per cent decline in house prices have been considered plausible? to illustrate this point one last time, consider bear stearns. with the benefit of hindsight, it would seem sensible that bear should have stress tested their funding resilience to a significant reduction in funding from the repo market. but how significant a reduction should have been stressed? a 10 per cent reduction, a 50 per cent reduction or a complete closure of the repo market? 8 in the event, the latter was obviously what occurred. but there had not been such an event in that market before, so it may well have been difficult to have even conceived of it or believed it to be a plausible stress. in terms of risk assessment, one could only have expressed it qualitatively not quantitatively. i could have told you that a closure of the repo market was an extremely unlikely event, but i could not have assigned a probability to it. for a stress test, the ability to only assign an ordinal rather than a cardinal probability is not necessarily a problem, but it is a problem in then assessing the market value of financial instruments issued by bear, or determining the appropriate risk mitigation strategy that bear should have adopted. however, post - bear, a complete closure of the repo market to a particular institution is now a conceivable event, and maybe i could even begin to assign a cardinal probability to it. and to some extent the market did in its re - pricing of cds premia of various financial institutions. but from a stress test point of view, it would appear that

abdul rasheed ghaffour : opening address - malaysia's climate finance day opening address by mr abdul rasheed ghaffour, governor of the central bank of malaysia ( bank negara malaysia ), at malaysia's climate finance day at cop28 uae, dubai, 3 december 2023. * * * assalamualaikum, good morning and welcome to the malaysia pavilion. over the past few days, pressure has intensified for advanced economies to deliver on their promises to support developing economies navigate the effects of climate change. one highlight has been the agreement by world leaders on formal adoption of the loss and damage fund. with commitments trickling in, a pragmatic solution towards the delivery of these commitments is critical. another major issue taking centre stage is the debate surrounding phasing out of fossil fuels. this has a direct bearing on many developing economies, including malaysia. with the undeniable high cost of reducing emissions, a balanced approach is crucial to ensure progress both in building climate resilience, and economic and social developments. we take great interest in the outcomes of these conversations. let me now turn to malaysia. we see the climate agenda not only as a pressing challenge but an opportunity for growth. through the national energy transition roadmap, the hydrogen economy and technology roadmap, and the new industrial master plan, malaysia is taking concrete steps that will enable us to advance sustainable practices across the economy. this is consistent with a just and orderly climate transition. effective and coordinated implementation of national and sector - level transition plans by the government is crucial. it addresses a key condition for malaysia to benefit from the opportunities offered by the green transition. this can be achieved by reducing strategic and policy risks for investments in the green transition and effecting partnerships between the public and private sectors. this would mean better higher skilled jobs, more sustainable and higher income, as well as overall shared prosperity. the malaysian financial sector is working closely with the government as part of the whole - of - nation approach to turn these plans into reality. significant efforts have been invested in strengthening our collective capacity, institutional frameworks and coordination arrangements that will drive financial flows towards malaysia's climate transition efforts. you will hear today some of these efforts at this pavilion. we have a packed programme, with an exciting line up of speakers who will share what malaysia is doing to innovatively bridge traditional financing mechanisms with sustainability to fund green initiatives. 1 / 4 bis - central bankers'speeches to kick things off