kuala lumpur: Bank Negara Malaysia (BNM) is stepping up its adoption of value-based finance, calling for its widespread adoption not only in Islamic finance but across the financial industry.
BNM Governor Datuk Abdul Rashid Ghafoor said there is a firm belief that value-based finance can be a powerful catalyst for sustainable growth and development.
“By prioritizing the values of our financial system, we can build a more durable financial system that enhances the purpose of finance and contributes to the well-being of the planet and its people,” he said at Kuala Lumpur Islamic Finance. He said this in his keynote speech. Forum 2023 and today’s release of his myWakaf 2.0.
The central bank governor acknowledged that moving forward from the “emerging” stage since the value-based intermediation (VBI) strategic framework was introduced in 2017 has not been easy.
Mr. Abdul Rasheed said that as the principles of VBI are universal, BNM is expanding value-based finance beyond the Islamic financial institution community to foster an inclusive and sustainable financial ecosystem in Malaysia. He said he hopes it will be more widely adopted.
“The implementation of sustainability principles in financial business is no longer a ‘niche’ but a business imperative, consistent with the global movement to encourage value-based financial and investment decisions,” he said. added.
He said the United Nations Conference on Trade and Development and the International Monetary Fund estimate that an annual global investment of US$4.3 trillion (RM20 trillion) is needed to advance the Sustainable Development Goals (SDGs).
“While this may seem a staggering number, it represents only about 1% of the total financial assets of US$379 trillion held by banks, institutional investors and asset managers,” Abdul Rasheed said. Ta.
This leaves vast scope for innovation in Islamic finance, yet to date, the full potential of Islamic finance has not been exploited, he added.
“We have a wide variety of Shariah contracts and instruments that can be tailored to engineer solutions that can serve the different needs of different strata of society. “There is the ability to do ‘blended finance’ using forms of capital, which expands the role of intermediation beyond credit provisioning and risk transfer,” he said.
Mr. Abdul Rasheed said integrating the SDGs into Malaysia’s national development plan and monitoring its implementation will improve quality of life, reduce inequality, foster more inclusive growth, and improve the country’s global competitiveness. He said that efforts will be concentrated towards this goal.
“The recently announced Economic Madani: Memperkasa Rakyat framework embodies our aspirations and commitment in this effort to balance economic growth with sustainable considerations,” he said.
Mr. Abdul Rasheed said that on the financial sector side, we are working towards sustainable development through the introduction of new sustainable financing instruments and tools for investors to find SDG-aligned investment opportunities in Malaysia. He said new efforts are underway to accelerate progress.
“The financial sector has a critical role to play in supporting sustainable economic transformation. We need to reprioritize our investments in line with principles based on