In particular, we needed to bear in mind that the euro area’s financial system is predominantly bank-based. Take the structures of private credit outstanding as an example: recourse to banks makes up more than 70% of non-equity external finance in the euro area. By comparison, in the US the equivalent proportion is only around 30%. This reflects the fact that the US financial system is primarily market-based. In the euro area, guaranteeing steady access to credit for households and companies largely means preserving the viability of the banking system. Banks play such a dominant role in our economy that it was appropriate to focus our non-standard measures on the banking sector. This profound contrast in financial and economic structures explains the different responses by central banks to the crisis as exemplified by the approaches of the ECB and the Federal Reserve System of the US. We rely on different channels as regards the transmission of our policy action. But these variations do not reflect conflicting views on fundamental principles or objectives. On the contrary: given the different structures, the approaches need to be different to achieve the same objective. Thus, I would strongly argue that central banks around the world are united in purpose. As I indicated before, the remarks I just made on the ECB’s response to the crisis did not contain any message concerning future monetary policy, and should not be interpreted as containing any such message.
Key agencies such as MGTC and Sustainable Energy Development Authority (SEDA) have been established to provide the required support and incentives to promote the industry. On the financing side, Bank Negara Malaysia has worked closely with the Ministry of Finance and the Ministry of Energy, Green Technology and Water to establish the Green Technology Financing Scheme (GTFS). The scheme is expected to benefit over 140 companies. With an initial allocation of RM1.5 billion, it was recently increased with an additional RM2.0 billion. The scheme was structured to reduce the financial risk borne by financial institutions, as the government guarantees 60% of the financing amount via Credit Guarantee Corporation Malaysia Berhad (CGC) and bears 2% of the total interest or profit rate. This financing framework aims to improve the preconditions for financial institutions to finance viable and innovative green technology companies. It provides avenues that help bridge information gaps between financiers and businesses, and introduces credit enhancements and financial incentives to address any market short comings in meeting a legitimate economic need. Efforts are also being carried out to strengthen the capacity of financial institutions to provide advisory support to businesses. The certification process that verifies the businesses which qualify for the GTFS is central to these efforts, as it not only verifies the technical capabilities of the businesses, but also assists in assessing its commercial viability. Since the introduction of the GTFS in 2010, the growth of green technology financing in Malaysia is beginning to gain traction amongst financial institutions.