Moreover, yields on government and corporate bonds have declined since the negative interest rate was introduced, as did mortgage rates, albeit to a lesser extent. Overall, financing costs for households and businesses are lower today than they were before the introduction of negative interest. Along with the rise in the volume of bonds issued, this is evidence that negative interest is also having some impact via the credit channel, even though growth in bank lending has not risen as would normally be expected. 2  On 18 December 2014, the SNB decided to charge interest of –0.25% on sight deposits held by banks and other financial market participants at the SNB. With the discontinuation of the minimum exchange rate, the interest charge was lowered further to –0.75%. Page 6/16  Challenges posed by low interest rates In Switzerland, therefore, negative interest rates have had the desired effect. Yet low interest rates also present a number of challenges and potential side-effects, which I would like to look at now. One challenge is communication. At first glance, imposing a charge on deposits appears to turn the logic and laws of economics on their head. It seems unnatural to pay interest on deposits. Consequently, clear communication of monetary policy is especially important right now. In the earlier part of my presentation, I demonstrated that negative interest rates in Switzerland are the result of a decline in the equilibrium interest rate and the SNB’s expansionary monetary policy – a policy rendered necessary by global conditions.
The first is advancing the sustainability agenda. As Malaysia charts its path towards net zero, significant investments are required to fund a range of mitigation and adaptation efforts. 1/4  BIS central bankers' speeches  Initiatives such as renewable energy, green buildings and low carbon cities work to reduce Malaysia’s carbon footprint, whereas measures such as safeguards against rising sea levels and extreme weather are needed to improve climate resilience. These add up to an estimated RM350–450 billion of investment needed over the period of 2021–2050 to reach our net zero ambition. From the perspective of businesses including fintech startups, aligning with the nation’s sustainability objectives could require pivoting to new sustainable business models, recalibrating existing practices, adopting new technology, and subscribing to certification and mitigation efforts against possible climate-related disruptions. All of these will create significant demand for green and transition funds in the coming years. Public sector funding is being directed towards these efforts, but the private sector plays a critical role in completing the picture. Institutional investors and large asset managers, through their capital allocation, can directly steer the flow towards climate supportive activities. Institutional investors have the capacity to take on a stewardship or active ownership role, encouraging and influencing investee companies to seriously consider their sustainability impact. By choosing to actively support Malaysia’s sustainability journey, investors not only contribute to the generation of positive impact, but also best position themselves to benefit from green and transition business opportunities in the future. Progress has been promising.