climate catastrophe. as we forge the path towards a climate conscious future, and for the whole system to change at the needed pace and scale, policy makers need to step up as well. for emerging economies such as malaysia, there is a careful policy balance between transitioning to a low - carbon economy while addressing needs of society and businesses. this is meant to minimise unintended consequences of channelling financing towards non - green and non - sustainable practices and to minimise transition risk. as the central bank, bank negara malaysia is cognisant of this in crafting our strategies to respond to climate risk. our commitment stems from the direct relevance that climate change has to our mandates in preserving monetary stability and financial stability. approximately 11. 7 % of malaysian financial institutions assets are potentially exposed to climate change. our aim is to ensure that financial institutions are adequately measuring, mitigating and building buffers against climate risk. our target is for climate risk to be featured more visibly in the risk management practices of financial institutions by 2022. of equal importance is our resolve to build their capacity to become effective agents of change in facilitating transition towards a low - carbon economy. a common language to categorise economic activities to help facilitate financial flows towards activities that would support the transition to a lower carbon economy, is therefore paramount. for this purpose, the bank issued the climate change and principles - based taxonomy discussion paper in december 2019. the taxonomy is now undergoing further refinements, and a pilot implementation for selected financial institutions will commence this month. collaboration on to my final c, “ collaboration ”. in his quest to clean up versova beach, afroz shaz would not have been as successful had he acted alone. he had help from organisations and volunteers from over 12 countries. the versova beach clean - up was one of the largest citizen initiatives the world has even seen. in the same vein, the bank values contribution and collaboration with various stakeholders. this includes the financial industry in planning an orderly transition towards a more climate - resilient economy. the joint committee on climate change ( or “ jc3 ” ) was set up in september 2019 as a platform for financial regulators and financial institutions in malaysia 2 / 3 bis central bankers'speeches to work together to deepen our understanding on climate risks and develop tools to effectively respond to those risks. the jc3 is chaired by the bank and securities commission malaysia, with bursa malaysia and 19 financial institutions as members. now i am

change have already increased five - fold in the past 30 years. the third is the rising income inequality that can threaten the fabric of our society. consider this. the top 1 % of the population has captured twice the global income growth of the bottom 50 % since 1980. worse still, inequality has persisted despite large transfers of public to private wealth in many countries. the fourth is the rising populism and protectionist policies. this can be seen in inward looking policies and anti - establishment views that have become more entrenched in parts of the world. slow growth, lack of economic mobility and erosion of trust in public and private institutions are among the factors that are likely to have contributed to this. like undercurrents before a storm, these trends have far reaching implications for political, economic and social systems. last but not least, the fifth shift is the advancement of technology. this has and will continue to 1 / 5 bis central bankers'speeches dramatically alter the way we behave, interact and transact. much has been said about the benefits, but an increasing reliance on technology presents risks that we cannot ignore. this includes issues of data privacy, discrimination or biases and also displacement of certain segments within society. in the digital age, higher order risks of cyber - attacks and operational disruptions are magnified in ways that we have yet to fully comprehend. calling for a financial system that is relevant, safe and socially responsible these five megatrends and finance are deeply intertwined. while undoubtedly finance has helped to power the economic rise of asean, its role in contributing to an increase in climate risk and inequality cannot be denied. therefore, as we consider the future of finance, we need to contemplate not only how these megatrends may impact finance, but how finance itself can respond to and shape these trends in more positive ways moving forward. in my mind, this calls for a financial system that is relevant, safe and socially responsible. finance must be relevant to the needs of the economy. this means that it must offer suitable, cost - effective and quality financial products and services for all segments of society. it must also respond to the changing demographics and structure of the economy. for example, as we move towards becoming a digital economy, the financial sector must accord adequate support to innovative smes, such as those involved in e - commerce. equally important, we must remember that this imperative is not only for banks, but extends to the other parts of the financial sector. non -