Bank Negara Malaysia: speeches

1. Beyond scale: what growth should achieve

Addressing the twenty-first edition of Malaysia's flagship Islamic finance forum, Bank Negara Malaysia Governor Abdul Rasheed Ghaffour argued that after decades spent building credibility, sophistication and size, Islamic finance should now be judged by what its growth makes possible. Climate pressures, ageing populations, broader development needs and a fragmented geopolitical order are changing what economies ask of finance.

2. A historical yardstick

He pointed to the Ottoman külliye complexes, where endowments funded schools, hospitals, libraries, welfare and trade around a mosque, and said such ecosystems were valued for the education, health, mobility and community wellbeing they sustained across generations. Resources mattered, but results mattered more. Success should therefore move from assets to outcomes, from compliance to the purpose behind the rules, and from the growth of finance to growth that finance enables.

3. Finance that empowers

Small firms generate almost 40% of Malaysian output and nearly half of jobs, yet face obstacles beyond credit. The social finance scheme iTEKAD combines funding with protection, skills and market access and has reached close to sixteen thousand participants; a home-based food entrepreneur who grew online and began exporting illustrates the intended result. Because every lending decision shapes the economy, capital allocation is an act of stewardship, and risk-sharing products, promoted through the i-CITA platform, should target food security and climate resilience.

4. What the central bank will do

The bank will enable responsible innovation, notably through its digital asset hub, review the Shariah contract framework with a strategy paper and exposure draft due this year, and carry the outcomes focus into the next financial sector blueprint. Three priorities follow: align capital with purpose, design products around the needs of underserved households and halal small firms, and keep fairness, integrity and empathy at the centre, with the higher objectives of Shariah as the compass.

1. Twenty-five years of the anti-money laundering law

Abdul Rasheed Ghaffour, Governor of Bank Negara Malaysia, used a compliance conference to mark 25 years of Malaysia's 2001 anti-money laundering act. He credits progress to repeated legal amendments, coordination bodies such as the national anti-financial crime and scam response centres and the national fraud portal, five national risk assessments, and supervision of more than 27 000 reporting entities, which earned a positive international evaluation in 2025. Results he cites: about RM1.9 billion of fraudulent transfers blocked in the first half of 2026, more than in all of 2025, and over RM37 billion of assets recovered in five years.

2. New threats

He sees two pressures. Geopolitical fragmentation is changing payment routes and trade corridors and straining cooperation, so it must feed into risk assessments. Technology is accelerating crime: AI-made fakes of voices and faces make scams harder to spot, around 95% of online fraud involves victims tricked into sending money themselves, and INTERPOL estimates AI-driven fraud is several times more profitable than older methods. Detection, he argues, must be automated as fast as deception.

3. Data and collaboration

The central bank, as financial intelligence unit, is investing in data-driven analysis. A pilot of the national fraud portal has flagged over 1 600 suspicious accounts that may be used as money mules, and new policy documents tighten technology risk management and banks' accountability for fraud. Banks and the payment network plan warnings that alert customers before a risky transfer is completed, with a pilot targeted for the first half of 2027, accepting some extra friction. He wants a shift from reacting to preventing fraud, more structured information sharing between firms and with the state, and stronger cross-border cooperation, ending with a call to anticipate, monitor, use technology responsibly and act jointly.

1. A changing growth model

Bank Negara Malaysia Governor Abdul Rasheed Ghaffour told an Islamic finance gathering that Malaysia's economy, now worth over RM2 trillion after growing almost seventeenfold since 1990, must now rely on quality rather than volume. He expects growth of about 4–5% in 2026 and points to four shifts: more complex, higher-value industries; productivity from technology, capital and talent; stronger domestic capabilities; and an energy transition requiring large investment. National plans for industry, semiconductors, energy and the halal sector set the direction, and investment incentives now reward value created rather than amounts invested.

2. Finance is not yet following

Banks, he says, will largely decide whether capital reaches those priorities, yet lending still goes mostly to services and remains small for manufacturing relative to needs. He attributes this not to reluctance but to information gaps, complex deal structures and unfamiliarity with new sectors, and asks whether lenders are still funding the old economy instead of the next one.

3. Islamic finance's opportunity

Islamic banks now provide nearly half of all financing, up from about a quarter in 2015, and the Islamic capital market from RM420 billion to RM670 billion, holding over 60% of the market. With established skills in structuring, Shariah governance and risk management, he argues the sector should use its strengths, risk-sharing and flexible structures, for long-term, specialised or underserved needs. That calls for sector and technology expertise, more sophisticated structuring, patient risk capital and better data, systems and talent.

4. Roles and national goals

He assigns tasks: boards should choose where they can make the biggest difference and reflect it in risk appetite and capital allocation; management should execute through new skills and partnerships; Shariah committees should engage early to support innovation within principles. Regulators too must shift from supervising what exists to enabling what should exist, without lowering standards. Institutions should draw on the wider ecosystem rather than build everything alone. Linking to the central bank's 2027–2030 blueprint, he says Islamic finance should be judged by how far it improves welfare, from longer, more secure lives to better jobs and a greener economy, by combining credit, equity and philanthropic capital.

1. Climate resilience as a financial issue

Closing the 2026 conference of Malaysia's Joint Committee on Climate Change, Bank Negara Malaysia Governor Abdul Rasheed Ghaffour argued that resilience to climate and nature risks is an economic and therefore financial priority, and offered three reflections.

2. Financing a credible energy transition

Renewables reached 31% of installed capacity in 2025, up from 25% in 2023, in line with the national roadmap, but AI and data centres, expected to use close to a third of electricity by 2035, will push demand sharply higher. Money exists; the bottleneck is turning it into bankable projects. His example: a remote town in Sabah running on a diesel generator next to a palm-oil mill whose methane could power it. Alone, such a project looks too small and unusual to finance, but with over 120 mills in the state it could become a model adding hundreds of megawatts. A climate finance platform has gathered 45 projects that together ask for over RM5 billion of funding, and he urges financiers to help them scale, and the central bank is studying how rules could give lenders room for well-managed, higher-risk transition financing.

3. Adaptation and nature

He wants money spent on resilience before floods or droughts rather than on repairs afterwards, supported by new national climate policies and better, more usable climate data so that uncertainty becomes priced risk. He also asks finance to value nature, on which over half of Malaysia's GDP depends, citing Singapore's choice to turn a concrete canal into a natural river park at half the cost. Banks can start assessing nature risks with existing resources, and he closes by calling for bolder capital, innovation and collaboration.

1. Thirty years of an invisible backbone

Marking 30 years of FAST, the electronic system Bank Negara Malaysia uses to issue and auction debt and money-market securities, Governor Abdul Rasheed Ghaffour recalled that it replaced a paper process and became a pillar of the local bond and sukuk market. He argued that market infrastructure, though unseen, is what lets savings reach productive investment.

2. What it made possible

The market has grown to about RM2.35 trillion by mid-2026, among the region's largest in local currency, and companies raised over RM377 billion through bonds between January 2025 and June 2026. Sukuk now make up more than 60% of the market, with over RM1.4 trillion outstanding, and Malaysia issued the first sustainable and responsible investment sukuk in 2015 and the first green sukuk in 2017. The system also kept markets working through stress and the pandemic.

3. The next generation

Because AI, investor expectations and interconnected markets are changing finance, the central bank is building FAST+, meant to be smarter (analytics and risk monitoring), better linked across issuers, investors and regulators, and open to tokenised and programmable instruments without sacrificing safety. With a new securities depository system soft-launched on 25 September 2026, it will support issuing, settling and holding tokenised bonds and sukuk.

1. Adapting to change

Speaking at the 31st Credit Guarantee Corporation awards in Malaysia, Governor Abdul Rasheed Ghaffour said adaptation, not standing still, drives success amid geopolitical uncertainty, rapid technology and climate disruption. Malaysia is in a strong position, with 5.4% growth in the first quarter, 2.9% unemployment and 1.6% inflation. Small firms, about 40% of output and nearly half of jobs, still face higher costs, thin margins and slow customer payments, which a 5 billion ringgit relief facility has eased, though temporary relief cannot answer recurring shocks.

2. A new guarantee scheme

He launched a 10 billion ringgit BNM-CGC Guarantee Scheme, a more scalable, market-based way to share risk for microenterprises, start-ups and firms in sustainability, innovation, strategic sectors and food security. Some viable firms are overlooked by conventional assessment because they have little history or collateral. A guarantee should not dilute lending standards; what makes it worthwhile is financing that would otherwise be declined or offered on better terms. The bank, with World Bank technical help, will also improve the wider guarantee framework through better coordination, targeting and data.

3. Three areas of progress

Widen the financing frontier to innovation and climate activities; assess firms in totality using cash flows, e-invoices and payment behaviour, as a complement to prudent underwriting; and pair finance with capability-building through platforms such as imSME and MyKNP, so that more firms grow into stronger mid-sized companies. His warning to lenders: sharing risk must never become a way of passing it on.

1. The Gelam tree and renewal

Speaking at the Sasana Symposium on the theme of reforms for resilience, Governor Abdul Rasheed Ghaffour likened structural reform to the Gelam tree, which thrives in harsh conditions by shedding bark and renewing itself. Monetary policy is an important defence and the current stance fits the growth and inflation outlook, but as a demand tool it cannot fix underlying weaknesses; reforms invest in the economy's future, raising productivity, competitiveness and staying power. Malaysia reformed after the Asian crisis, again when investment slowed in the mid-2010s, and after the pandemic; the central bank's part is preserving macroeconomic stability so reforms can take hold, through steady prices, a healthy banking system and well-functioning markets, and it will keep doing so. The medium-term outlook stays favourable, with firm growth and manageable inflation.

2. Productive capacity and public finances

The latest reform phase has two pillars. On investment, the aim is not simply more but the right kind, bringing technology, better jobs and greater value; Malaysia approved 815 billion ringgit over two years, almost half of GDP, mostly in advanced manufacturing, semiconductors and digital technology. On fiscal capacity, phased-in targeted diesel subsidies, subsidy reforms, tax adjustments and a fiscal responsibility law cut the deficit from 6.2% of GDP in 2020 to 3.7% in 2025. Growth was 5.2% last year, the ringgit led regional currencies, and 4-5% growth, toward the upper end, is expected this year despite the energy shock. None of this happened by chance, he stressed: difficult choices were made early and in sequence. A 1.5 billion dollar global sukuk drew nearly five times the amount offered, at record-low spreads.

3. Where to go: jobs, skills and wages

He set out anchors for the next stage. First, make growth felt at home through better jobs: high-skilled employment rose from 27.5% to 30.1% of the total between 2019 and 2025, and the investment pipeline could create about 245 000 jobs, many of them higher skilled, yet over two thirds of workers hold low or mid-skilled roles. That calls for continuous upskilling, digital fluency, vocational training and STEM and AI education under the 13th Malaysia Plan, plus wages that reward productivity, minimum wage increases as a floor, and a more coherent social protection system that tackles the roots of vulnerability.

4. Value creation and a better financial sector

Second, move from extracting value to creating and retaining it: investment should leave behind stronger local firms, skills and technology diffusion, through research, design, engineering and programmes such as SemiconStart, and growth must stay sustainable given the country's rich biodiversity. Third, everyone has a role: the upcoming Financial Sector Blueprint 2027-2030 aims for finance that builds resilience to climate shocks, supports prosperity by channelling capital to productive firms, with Islamic finance as a force for change, and is future-proofed through proportionate regulation that does not curb innovation.

5. Co-creation and closing

The central bank is moving towards co-creation with banks, businesses and technology players, through platforms such as the climate change joint committee, the regulatory sandbox and iTEKAD, which will launch an employment initiative. Countries should stay ahead of the curve instead of solving yesterday's problems. Closing on Gelam bark that let Malay ships flex with the waves, he said resilience means adapting without losing one's bearings, and the task now is to turn stronger foundations into stronger incomes, investment into opportunity and resilience into progress that many people share.

1. Innovation without trust

Speaking at the first AICB Nexus conference, which joined banking and bank-audit communities, Governor Abdul Rasheed Ghaffour said AI is reshaping finance, helping detect fraud, assess risk and serve customers, but that finance rests on trust, so innovation without trust is not progress. He set three priorities.

2. Purposeful and responsible innovation

First, purpose: over 70% of Malaysian financial providers have deployed at least one AI application, mostly for internal gains, and the next frontier is using AI on problems no institution can solve alone, such as scams and cyber threats, where BNM, police, banks and PayNet already share intelligence; institutions should compete where markets demand and collaborate where the public interest does. Second, responsibility: trust in AI is a governance challenge, raising questions of accountability when decisions are hard to explain, fairness as models keep learning, and control frameworks that lag capabilities. AI belongs on the board agenda with clear outcomes and a defined risk appetite, assurance functions must be able to explain and challenge outcomes, and accountability cannot be handed to software.

3. Progress for all and BNM's approach

Third, progress must reach everyone: invest in people, with upskilling and reskilling and the AICB's Future Skills Framework. BNM's stance rests on proportionality, parity and technology neutrality, with early engagement, clearer expectations and shared infrastructure; the Open Finance framework starts phased implementation from 2027, tokenisation moves into pilots, and the Financial Sector Blueprint 2027-2030 follows.