Zeti Akhtar Aziz: Progress and advancement of Islamic finance
Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara
Malaysia), at the Islamic Economy Award 2014, Dubai, 14 January 2015.
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It is my very great honour to receive the Lifetime Achievement Award for the global
development of Islamic finance conferred under the patronage of His Highness Sheikh
Mohammed bin Rashid Al Maktoum. I am most humbled to receive this award. It has been
my privilege to contribute to the international efforts to create the foundations for a
sustainable and resilient Islamic financial system in the global financial system. This recent
decade has been highly challenging for the world of finance, yet the experience of
confronting the challenges has been tremendously fulfilling. The overall progress and
advancement of Islamic finance has continued to be accompanied by growth, dynamism and
stability.
Islamic finance brings immense benefits to the overall economy. It is a form of financial
intermediation that is well anchored to the real economy. With its internationalisation, that
began at the turn of the millennium, it now serves to enhance and strengthen the
interlinkages between economies, facilitating international trade and cross border investment
activities. This trend has marked the beginning of intensified collective efforts to enhance the
Islamic financial infrastructure to create a robust and resilient global Islamic financial system.
The focus has gradually shifted from strengthening intermediaries in the domestic Islamic
financial industry to fortifying the regulatory, supervisory, Shariah and liquidity framework
necessary for such a robust financial system. This has involved greater international
cooperation and collaboration in this new environment. A further development has been the
evolution of the domestic Islamic financial markets into international markets. This has
manifested itself in the form of foreign participation in raising funds and in investment
activities in these markets, thus generating increased cross border financial flows. This has
drawn participation from both emerging and the developed world in Islamic and non-Islamic
countries. Going forward, the Islamic financial system is envisaged to have an increasing
important role in connecting the world economies - through the strengthening of financial
linkages, it will in turn facilitate increased international trade and investment activities.
This internationalisation of Islamic finance will require the intensification of international
collective efforts to establish the international Islamic financial architecture, and the
development of mechanisms for more effective cross-border liquidity management. Central
to achieving this next thrust of development is to develop a high caliber and competent talent
base to cultivate financial innovation. Therein lies the investment needed in human capital
development to support the industry.
While Malaysia's own experience and aspirations is to evolve into an international Islamic
financial centre, we also continue to promote a more inclusive financial system to support a
more balanced growth. On the international front, the aim is to enhance our international
connectivity and thus establish greater economic linkages with other economies. In Dubai,
the efforts by the authorities to create the Islamic economy initiative to further enhance the
inter-linkages with other Islamic financial centres is also a step towards strengthening the
international economic connectivity especially between our regions. The efforts will not only
enhance Islamic finance as an effective financial intermediary but also as a binding force for
the other segments of the Islamic economy, including with other parts of the world.
Our collective efforts in developing Islamic finance will provide an important platform to
unlock the potential opportunities that lie therein to benefit every segment of the society and
the business community that now extends beyond our domestic borders. In this highly
dynamic and rapidly changing world environment, efforts will need to be unrelenting on
developing further the enabling infrastructure, the foundations for stability and enhancing the
internal capability. And with the greater international linkages, the greater will be the
importance of working collectively for the common goals we aspire and for which the benefits
will be mutually reinforcing.