proportionality however, does not necessarily mean less stringent regulations. for some institutions, it may mean lower leverage, additional safeguards and prudential measures. thus, proportionality entails an adjustment to the complexity of the rules taking into account the risks and externalities posed by financial institutions. it is important to understand that this does not necessarily result in a lower degree of stringency. this practice is not entirely new as we have been practising proportionality in regulating dfis. this is reflected in prudential regulations on capital and liquidity which are applied to dfis as well as corporate governance and financial reporting requirements. moving forward, this application of proportionality will be further enhanced to reflect developmental outcomes. the bank is refining its methodology for dfis to support greater differentiation at the individual institution level based on the nature, size, complexity and most importantly, the unique roles and mandates of each dfi. prudential and conduct standards applicable to dfis will also continue to be renewed and adapted where relevant. the balance that we aim to strike can only be achieved if dfis also lift their game to ensure strong internal controls and risk and performance management. in addition to proportionality, a related issue is the need to review the overall dfi landscape in a holistic manner. an important step towards steering the dfis forward will be to conduct a review on the mandates of the dfis. since the establishment of the dfis in malaysia more than four decades ago, their mandates have remained largely unchanged. periodic mandate reviews are important especially in a country like malaysia where there is rapid economic growth and structural change as the country moves from one stage of growth to another. mandate reviews will not only identify gaps within the economy that dfis can play a meaningful role, but to reduce areas which overlap with each other and other players in the financial sector. for the immediate future, there are pockets of financing gaps particularly in the new and emerging sectors that the dfis could support. examples of these areas are : the high4 / 5 bis central bankers'speeches end services and advanced manufacturing sectors, as well as knowledge or technology - based sectors including green - tech and biotech industries. these are key drivers that will accelerate the transformation of malaysia into a high - income economy in a sustainable and inclusive way. last but not least, as part of the holistic review, we should be prepared that some dfis may have to “ graduate ”

##qe in order to preempt manifestation of a risk that conversion of the deflationary mindset might be delayed and to maintain the improving momentum of expectation formation. looking at the developments after the expansion of qqe, the positive contribution in the cpi excluding energy stopped decreasing in early 2015 and then resumed an uptrend. the positive contribution has been about 1 percentage point recently, thus marking the largest size since the introduction of qqe. during the same period, the year - on - year rate of change in the cpi including energy has declined, which can be attributed mainly to an increase in the negative contribution of energy items. given these developments, it can be judged that the underlying trend in inflation, which was on the verge of returning to deflation due to the consumption tax hike, has come back since the turn of 2015 on a rising path toward 2 percent thanks to the effects of the expansion of qqe. 2. output gap next, i would like to talk about developments in the output gap, which can be defined as a gap between the aggregate demand and supply capacity of japan ’ s economy. in short, the output gap is likely to improve steadily against the backdrop of an expansion of demand such as business fixed investment and private consumption. with regard to business fixed investment, as i have explained, surveys including the tankan suggest that firms ’ fixed investment plans for fiscal 2015 have been at high levels. although firms ’ actual fixed investment has been somewhat weaker than planned so far, possibly in view of high uncertainty over prospects regarding the slowdown in emerging economies, for example, it is expected to take place firmly sometime soon. with regard to private consumption, the employment and income situation is the key. on this point, labor market conditions have continued to tighten, as i have mentioned, and a rise in wages has started to spread across industries and by size of firms. looking ahead, reflecting historical high corporate profits and the tight labor market, wages are expected to gradually rise further, which will underpin resilience in private consumption. therefore, increases in business fixed investment and private consumption are likely to lead to an improvement in the output gap and thereby push up prices moderately. such a virtuous cycle is likely to become more evident going forward. bis central bankers ’ speeches on this point, looking at the recent developments in fixed investment and wages in relation to corporate profits, it is true that these give the impression that the paces of increase in fixed investment and wages were