BIS Review 98/2008  7  Market-driven financial market developments need the support of critical infrastructure, namely: (1) Information that allows efficient decision making and pricing on various asset markets, financial as well as related markets such as real estate market, which are still very lacking in many emerging markets, and may be an area of public support. (2) Legal reforms to ensure an enabling environment for innovation in products and business models for the financial system. And (3) Human resource with proper competency in modern financial and risk management are scarce and is becoming a bottleneck for development. The authority may need to step in to facilitate training and accredition of professional standards, if it has external benefits. Notwithstanding these challenges, however, notable progress has been made by emerging markets in the past decade, much of which is catalysed by comprehensive economic reform in which market-oriented economic and financial liberalization have been the main features. For East Asia, despite the progress made, significant gap still exists in diversification, efficiency and robustness when compared to the role played by financial markets in developed economies. Looking ahead, in addition to the pressure from globalization, the shift in demographic structure will also be an additional pressure. This is to say some smaller emerging markets will face an aging population and the increase in demand for wealth management, while the supply of local products are limited for diversification. This will pose challenges for inter-temporal allocation of resource and risk.
The world around us is changing so rapidly, and the challenges we face so multi-faceted, that our best hope for creating sensible financial policy and effective conditions for sustainable development must lie in working together. This has certainly been our experience in Malaysia, particularly in recent periods. Let me just mention three of these partnerships. In Islamic and sustainable finance, the Value-based Intermediation Community of Practitioners or VBI COP has played a key role in driving the industry-wide implementation of VBI principles. The COP has been instrumental in developing practical frameworks, tools and guidance that have 2/3  BIS central bankers' speeches  been widely adopted by the industry in supporting the offering value-based financial solutions that are aligned with the SDGs. As an example, for green finance, the Islamic banking industry is supporting approximately 4,500 renewable energy and green projects worth more than USD2.2 billion. On climate, the Bank and Securities Commission Malaysia have established the Joint Committee on Climate Change or JC3 to pursue collective climate actions. The Committee brings regulators and the financial industry together to promote alignment and drive climate actions in five areas – risk management, governance and disclosures, green finance and innovation, data and capacity building. Finally, sustainable finance would ring hollow without ensuring that our communities – especially our most vulnerable communities – have the means and ability to make good financial decisions.