quarter, uk gdp will still be around 12 % below its level at the end of 2019, a huge shortfall. the impact has been synchronised across economies – the similarities of this shock far exceed the differences in terms of economic impact. that said, within economies – the uk included – the impact of covid has been highly uneven across sectors. those that conduct activity involving large amounts of close human contact have obviously been most seriously affected. i would add that this has led to other notably uneven and unequal effects, because these sectors tend to have higher proportions of low paid workers, female workers, and there is a concentration by ethnicity as well. this is an issue the resolution foundation has done some commendable work on ( cominetti et al, 2021 ). a common question that we ask about economic shocks is whether it is a demand or supply shock. as monetary policymakers we ask this question with good reason – the identification of shock type matters for all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice the impact on spare capacity and inflation. so, what is the answer for covid? the answer appears to us to be both : demand and supply. this is not surprising – shutting large parts of the economy down to protect against infection affects both demand and supply. but this is highly relevant to the task of getting over covid, and for monetary policy. let me try to illustrate the nature of the covid shock through the lens of aggregate demand and supply. the first point to make is that illustrating the shock through a calculation of the output gap alone isn ’ t very helpful, precisely because it is the net of two shocks. in chart 1 i have therefore shown the historical path of aggregate demand ( gdp ) and supply ( potential output ) over the last twenty years, consistent with past mpc forecasts. i would caution against over - interpreting the detail of this chart, as there are several ways to represent aggregate supply and demand, and thus the output gap. but, detail notwithstanding, it is clear that while a gap has opened up between demand and supply during the covid pandemic, the overwhelming feature is the coincident hit to both demand and supply. that stands in marked contrast to the more pronounced impact on demand following the global financial crisis, and persistent period of spare capacity thereafter. as well as the covid shock, the behaviour of supply and demand also reflects

adnan zaylani mohamad zahid : leaders setting the direction for change opening remarks by mr adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the sustainability leadership programme for financial institutions, 14 july 2021. * * * introduction good afternoon and a very warm welcome to all. thank you to ibfim and the university of cambridge institute for sustainability leadership ( cisl ) for this invitation to deliver the opening remarks. at the recent joint committee on climate change ( jc3 ) conference held last month, in his address, sir david attenborough somewhat laid down the gauntlet, in particular for us in the financial industry. “ all of us, no matter who we are, have the responsibility to care for the planet. the future of all humanity now depends on us and on none more than you in the world of finance. you have the fate of the whole world in your hands. ” with this in mind, it is quite apt that we are here, senior leaders in the industry, participating in this sustainability leadership programme over the next two days. over the past 18 months, many have felt the economic and social impact caused by the global health crisis. at the same time, the world has not been spared from natural catastrophes due to climate change. the latest being the mudslide in atami, japan. in malaysia, more than 25, 000 people were displaced from their homes due to severe flooding in several states between november 2020 and january 2021. these, among many other incidents, are growing evidence that climate change results in more frequent extreme weather events bringing destructive consequences along with them. while causing great upheaval, the pandemic and climate crisis provide an impetus for us to reset and reprioritise resources to re - steer our economies and financial systems to be more sustainable and inclusive. islamic finance ( if ) has large potential in this space. the concept of vicegerency on earth in the quran, which asserts mankind ’ s responsibility to take on ownership over preservation of wealth and resources on earth, as well as the universal values of maqasid shariah resonates well with the principles of sustainability. as such, it is not surprising that islamic financial institutions have stepped up to meet this challenge, evidenced through the value - based intermediation ( vbi ) initiative and practices by islamic banks and takaful operators. consequently, as sustainability becomes a global