norhana endut : into tomorrow's malaysia - institutions, inequality and innovation welcoming remarks by ms norhana endut, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the 2023 ameu economics summit, kuala lumpur, 13 august 2023. * * * assalamualaikum and good morning, everyone. thank you to the association of malaysian economics undergraduates, ameu, for the invitation to deliver the opening remarks for this flagship event, the ameu economics summit 2023. let me start by saying, welcome to sasana kijang! yesterday was international youth day, celebrating the energy, hope and new ideas that youths bring to the table in shaping the future of our nation. let me therefore commend the ameu for organising today's event, with the theme " into tomorrow's malaysia : institutions, inequality and innovation ", which in my view, aptly focuses on the important issues which is on our institutions, and the role they play in building a progressive and advanced malaysia. ladies and gentlemen, let me begin by borrowing a phrase from one of my professors during my phd years, the late, professor douglas north who was the 1993 nobel prize laureate in economic sciences for his work on the role of institutional change and cognitive approach to economics. he said, and i quote, " to predict the future we would have to know today what we learn tomorrow which will shape our future actions ". professor north underscored that institutions form the incentive structure of a society and thus, the political and economic institutions of a nation are the underlying determinant of a country's economic performance. to this, i would like to add that, after more than two decades in policymaking, i would argue that institutions are the sole determinant of a nation's economic development. institutions are the humanly devised constraints that structure how humans interact individually and as a society. these constraints are either formal constraints, such as rules, laws and constitutions, or informal constraints such as norms, behaviours, conventions, and self - imposed codes of conduct – and importantly, how these constraints are being enforced. north argued that learning the evolution of institutions and what drives the evolution helps inform us of the path of economic performance of a nation. what does this mean for today's discussion? 1 / 4 bis - central bankers'speeches firstly, a critical assessment of our institutions is important for us to predict where our nation is heading

assessing how their business and operations could be affected by climate risks. throughout the journey of conducting the stress test, financial institutions will uncover gaps related to data, technology, and methodologies. this serves as a starting point for the institution to assess their internal capability and find 1 / 3 bis - central bankers'speeches ways to address these gaps. in other words, the climate stress test is a forward - looking tool to help financial institutions in identifying, measuring and mitigating their climate risk exposures. when designing this stress test for malaysia, at bank negara malaysia, we have strived to incorporate learnings from other jurisdictions, including adapting and incorporating several malaysia's specific elements in terms of its economic structure and financial system. we have also incorporated feedback from domestic industry players. in this regard, i would like to take this opportunity to extend bank negara malaysia's gratitude to many of you here who have provided invaluable feedback during the drafting of the methodology paper and reporting template. we truly appreciate the open and collaborative spirit extended by everyone, an approach that continues even up to today. climate risk stress testing is still in its infancy globally. therefore, we have strived to balance between pragmatism and accuracy when specifying our requirements. where possible we have tried to work around data limitations, lack of technical expertise as well as under - developed modelling techniques. however, considerable challenges remain for financial institutions to successfully run this stress test. we will journey with you through these challenges. it is as much a learning experience for bank negara malaysia as it is for all the financial institutions running the stress test. that is one of the reasons we are all here today at this workshop. i believe that together we can overcome many of the hurdles. climate risk is a collective action problem. it may be in each individual's best interests to act selfishly, regardless of what other individuals do. however, if all individuals act selfishly, then the outcome for everyone is worse than if we all cooperate. at the country level we see this playing out in global emissions reduction. a single small country may feel that spending money to cut emissions may do little for global climate change, and hence choose not to do so. however, such situation could lead to some other, or even all, countries, to opt not to cut emission, and thus, we will end up in a bad outcome globally and having the adverse impact of unattended climate risks being faced collectively. at the individual