Zeti Akhtar Aziz: A milestone towards a more efficient and internationally integrated global Islamic financial system Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the global launch of Thomson Reuters Islamic Finance Gateway, Kuala Lumpur, 22 February 2010. *  *  *  In this more challenging global economic and financial environment, Islamic finance has remained dynamic with a steady pace of innovation and fast growing as its expansion gains further momentum. This has demonstrated not only its viability and resilience but also its ability to remain competitive. This decade has also seen the increased internationalisation of Islamic finance as it extends it outreach to serve the global community. The accelerated development of the Islamic financial markets and the supporting international Islamic financial architecture as well as the trend towards greater liberalisation have increased the integration of Islamic finance into the international financial system. Today’s launch of the Islamic Finance Gateway by Thomson Reuters is indeed a welcome development. The timely access to a broad range of key information on Islamic finance including on the products terms, structures and Shariah rulings will contribute to enhanced transparency in the Islamic financial markets. As a platform that allows for price discovery, it will contribute towards the more efficient functioning of the various Islamic financial markets across the world. It will also foster a greater international understanding of Islamic financial practices in the various Islamic financial markets.

The MPR is likely to be held at its technical minimum over the next 24 months; FCIC funds are provided over a 4-year horizon, and even short-term liquidity facilities will remain in place until early 2021. 16. Still, some challenges remain on three fronts: a. Lending to large corporations. For a number of years, big corporations have been tapping international and domestic corporate bond markets. They faced the Covid-19 crisis with rather sizeable cash holdings from bond issuing in the first quarter and the drawdown of bank credit lines. Yet this liquidity will not last forever. Reactivating the corporate bond market is key to prevent largescale corporations from crowding out SMEs from access to bank lending. The government and the CMF have adjusted regulations to speed up bond issuing and the Central Bank asset purchase program is likely to trickle down to corporate bonds, but more government action may be needed in order to reduce risk over these assets. b. Expanding non-conventional tools. Right now, the Central Bank has limited reach in the asset market, since the Constitution forbids it from buying Treasury bonds even in the secondary market as well as nonfinancial corporate bonds. A Constitutional reform is making good progress in Congress to remove the first constraint. c. Recovering private consumption and investment. Consumer and firms’ expectations have plummeted in the last eight months, responding to the social crisis, first, and to the risk-off mood of the Covid-19 pandemic, later. Private consumption and Investment are expected to drop 6% and 12% this year.