. this discussion is noteworthy, not much per se, but because it underlines the concern that monetary policy is left to act in isolation. indeed, the fact that monetary policy is still effective does not mean that it can support macroeconomic stability on its own. in order to achieve satisfactory growth, it needs to be complemented by budgetary policies aimed at creating appropriate macroeconomic conditions, as well as by further reforms aimed at increasing potential output growth. in the past years of crisis, monetary policy has bought time for the decisions in other spheres of policy see locarno, a., a. notarpietro, and m. pisani, “ sovereign risk, monetary policy and fiscal multipliers : a structural model - based assessment ”, banca d ’ italia, temi di discussione ( working papers ) 943, 2013 ). mario draghi, “ global and domestic inflation ”, speech at the economic club of new york, 4 december 2015 ; vitor constancio, “ in defence of monetary policy ”, 11 march 2016. estimates computed using the banca d ’ italia quarterly model. f. busetti, g. ferrero, a. gerali and a. locarno, “ deflationary shocks and de - anchoring of inflation expectations ”, banca d ’ italia, questioni di economia e finanza ( occasional papers ), no. 252, 2014. bis central bankers ’ speeches making, but beyond a certain limit such a role would inevitably run into unintended consequences. should financial stability considerations interfere with monetary policy? 17. my reading is that it is important to consider the implications of monetary policy for financial stability, but that financial stability depends on adequate nominal growth. it is thus dangerous if monetary policy fails to pursue its own targets. as highlighted in the latest ( november ) financial stability review of the ecb, banks ’ profitability and debt - sustainability continue to be challenged by a weak economic recovery. 18. are concerns for financial instability – due to the very accommodative monetary policy – currently justified in the euro area? it does not seem so. indicators of imbalances in housing and credit markets do not point to increasing vulnerabilities in the euro area as a whole : estimates of over - valuation of residential property prices do not signal widespread risks ( figure 3 ), and the financial cycle is still negative ( figure 4 ). of course, aggregate data may mask hetero

forward. i would like to thank the members of the financial market committee and industry association representatives for collaborating with us for the common and greater good of market development. the fmc and its subcommittees have met several times. some of the initiatives have already been rolled out ; such as the extending of trading hours for the fx market and the kl usd / myr reference rate. some are going through the woodworks of development. i would like to discuss a few here. 1. we are embarking on a progressive journey of a more liberalized and conducive financial market operating environment. as a concrete step, i would like to announce the introduction of a pilot program for the usd / myr and cnh / myr markets. under this program, residents will be allowed to undertake hedging transaction for usd and cnh against ringgit without the need for sighting of the underlying documents. subject to a position limit, only a declaration by the customers will be sufficient. accordingly, cancellation of the hedging will also be freely allowed. 2. to further complement this, the bank is also currently working with the securities commission and bursa malaysia to facilitate the introduction of usd and cnh against ringgit futures for the onshore exchange. similar to the interbank market, these will, for now, be subjected to position limits, and for now only applicable to residents. we shall review this policy from time to time, with a view to further liberalise the rules. 3. the financial market committee ( fmc ), through an industry - driven effort, is in the final stages of rolling out an operational framework for foreign exchange administration ( fea ) compliance. this will be an industry standard that sets the minimum due diligence and list of documents required for fea. further to this, a standard summary of the relevant fea rules to facilitate common understanding and consistent interpretation among market participants is being formulated. it is expected, through this important initiative, there would be better clarity and greater efficiency for the financial institutions and their customers, in undertaking fx and hedging transactions. taken together, these three measures are targeted at residents such as the small and medium enterprises with a view to expand their access to hedge freely and directly with onshore banks. this flexibility will provide the avenue for simplified processes and flexible hedging activities within prudential limits and incentivise residents to use onshore banks for their hedging needs. these are but first steps.