adnan zaylani mohamad zahid : review and outlook of the malaysian financial market speech by mr adnan zaylani mohamad zahid, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the financial market association of malaysia 2024 annual dinner, kuala lumpur, 29 november 2024. * * * it is an honour and privilege for me to be here tonight. let me first extend my heartfelt congratulations to ppkm and the organising committee for putting together this much anticipated annual event. i always look forward to this dinner. besides being highly entertaining, it's a time to catch up with friends and colleagues in the market in a different setting, as well as allowing me to share some thoughts on our financial markets. we are, after all stepping into the final month of the year, so this is a good time as any for us to reflect on the year and to prepare ourselves for the challenges and opportunities that lie ahead. financial market review – resiliency of the ringgit i recall a year ago, at this dinner, expressing somewhat, a'cautiously optimistic'view on the ringgit for 2024. this was on the back of an expected end and turnaround in the fed hiking cycle. well, the first half of the year saw ringgit come under pressure, trading at historical low levels, driven by global uncertainties surrounding us policy rates, china's growth trajectory and ongoing geopolitical risk in europe and middle east. these factors created a highly challenging environment. for us, this marked only the second time that malaysia has faced negative interest rate differentials compared to the us. the wide interest rate differentials had shaped the behaviour of investors, corporates, exporters, importers and the broader public. we saw increased interest among investors and the public to allocate funds to foreign currency assets. exporters preferred to retain earnings in foreign currencies, while importers front - loaded their purchases taking advantage of the forward discounts on the exchange rate. similarly, some corporates were observed expediting the repayment of foreign currency debt to reduce their debt servicing cost as well as their exposure to exchange rate risk. these conditions led to the ringgit trading under pressure in the first half of 2024. since then, we have turned the corner. firstly, the coordinated actions by bnm and the government in encouraging income repatriation and conversion among the glics and glcs played a crucial

, for example, allowing merchants to enhance profitability by selling goods and services online, or indeed driving exports. however, the benefits go hand in hand with new risks and invites new thinking on how to preserve fundamentals such as consumer privacy and security, as well as how to preserve monetary and financial stability. amidst this background, we must consider how policy - makers can best support the development of a fintech ecosystem, but doing so in a safe manner. how are we as a regulator embracing these challenge? like many other central banks, we have already embarked on a digital journey. considering our role in the oversight of the financial system and preserving financial stability, we must look forward and anticipate emerging trends so that we can react proactively. accordingly, we have widened the list of the strategic objectives of the national bank that now explicitly incorporate support of technological progress and financial innovations, as well as financial literacy as important tool for protection of consumers in the fintech environment. regulators cannot control nor predict what innovation will look like in the future. however, given the benefits it brings, regulators can contribute to the development of a fintech ecosystem by creating an enabling environment for the entry of new products or 2 / 4 bis - central bankers'speeches new players into the financial services market. usually, regulation is seen as a significant challenge for fintech - led transformation. in this context, together with the ministry of finance, we have put a lot of effort to significantly update payment services regulation, which is currently going through a legislative approval process. the new legal framework for payment services embodies objectives that seek to foster innovation while ensuring a level playing field for all players, including newcomers. an important step in the same direction are efforts for digital identity verification of consumers that has a significant potential to drive greater levels of financial inclusion and financial accessibility. regulators can enable, encourage and support innovations in financial services, by providing regulatory certainty and clarity. considering this, in the national bank we established the so - called " innovation gateway ", to serve as a central point of contact and communication channel between innovators in the financial industry, the central bank, and other relevant authorities. to better understand the fintech state of play in our economy we conducted the first national survey and prepared a feasibility study, which clearly underline the opportunities and benefits that fintech can bring to our country, as well as the barriers that need to be overcome for further development. the main conclusion of the feasibility study that follows the survey