he was a pioneer in the field of central banking in malaysia, and his visionary leadership laid the groundwork for many of the institutions that we have today. tun was known to be a man of principles – in particular, trustworthiness and integrity. his relentless pursuit of excellence and formidable intellect were matched by a deep sense of purpose to serve the country. risk assessment under knightian uncertainty we as policymakers find ourselves navigating an era marked by unprecedented global uncertainties. while monetary policy has always involved some level of uncertainty, recent macroeconomic trends including the ongoing technological breakthroughs coming from machine learning and artificial intelligence, and the shifting geopolitical dynamics have amplified this uncertainty. this compels us to reassess our approach to monetary policy and increase the focus on risk assessments, for this to be prioritised at the forefront to support informed and effective decision - making. in this context, i would 2 / 6 bis - central bankers'speeches like to revisit the concept of knightian uncertainty2. the concept indicates that there is a critical distinction between risk and uncertainty. risk presents uncertainties with known and measurable probabilities. uncertainty on the other hand, is characterised by unknown and unquantifiable probabilities of occurring. accounting for both risk and uncertainty in policymaking is critical to ensure we are able to address macroeconomic challenges effectively. in facing these uncertainties, malaysia is no different from the rest of the world. the structural trends that i outlined earlier have resulted in an environment where conventional economic models struggle to offer us insights. these unknown and unquantifiable uncertainties pose a formidable challenge to policymaking. to better navigate these challenges and uncertainties, we continue to explore frontier methods and go beyond conventional approach. we have to diversify our surveillance methods. for instance, we have our regional offices to conduct on - the - ground surveillance and actively engage with relevant industries. we also use high - frequency data to assess the state of the economy and spend a great deal of time filtering the noises from such data. bnm's approach to monetary policy remains data - driven and forward - looking. to this end, we continue to closely monitor the balance of risks surrounding our domestic inflation and growth outlook, and will ensure that our monetary policy stance remains conducive to sustainable growth amid price stability. monetary policy in a post - globalisation environment the early 1990s saw the world enter an era of " hyperglobalisation " where

trade grew markedly quicker than global gdp. the integration of global supply chains drove costs down and enabled low inflation despite relatively loose monetary policy. indeed, central bank policymaking during those times were relatively more straightforward. now, the recent trend of deglobalisation, reshoring, and supply chain fragmentation - particularly following the pandemic and ongoing geopolitical tensions - have disrupted these established assumptions. this combined with the rapid increase in digitalisation including the emergence of central bank digital currency ( cbdc ), could have implications on monetary policy either through the effects of tightness in financial conditions or other monetary policy transmission channels. conventional thinking about monetary policy in this new economic environment characterised by increased risks and fragmentation will no longer be sufficient. amid this new economic reality, policymakers are confronted with the question of whether inflation dynamics are shifting structurally, which could result in a change in the traditional phillips curve relationships, thereby complicating the trade - offs between inflation control and growth support. moreover, another potential factor that could contribute to the more complex environment is the quality and timeliness of economic data which may have been challenged amid ongoing heightened global uncertainties. as a result, our conventional thinking about monetary policy may require a closer look. while established macroeconomic assumptions continue to underpin baseline scenarios, their relevance in the current environment is increasingly uncertain. this 3 / 6 bis - central bankers'speeches evolving context presents challenges in forecasting and subsequently formulation of monetary policy decisions, underscoring the need for greater adaptability and innovation in central banking. the vast unexplored area pertaining to macro - financial trade - offs and linkages last but not least, one of the most intricate challenges that policymakers have had to navigate is the interplay between monetary and financial stability. there remains a vast, unexplored area involving the potential trade - offs and linkages between monetary and financial stability. here, we are highly privileged to have professor helene rey with us. professor rey's research on global financial cycles and its spillovers to emerging markets offers valuable insights in this domain. her seminal research in the field of monetary and financial economics, especially looking into the global financial cycle has underpinned our understanding, particularly on capital flows and external shocks. 3 i have taken a keen interest in her study on risk - taking among financial intermediaries, which have uncovered unexpected trade - offs. conventional economic models often indicate that financial agents such as banks and investors operate identically in terms of risk