Distinguished Guests, It is my honour to be invited to address this distinguished audience at this ‘Asian Islamic Banking & Finance Summit - Developing a Comprehensive Islamic Financial System’, organised by the Euromoney Seminars for the Asian region. While the overall development of Islamic banking and finance for more than three decades has been evolutionary, the pace has intensified in recent years. Islamic financial concepts have been incorporated into many financial products to meet the changing needs of consumers, businesses and investors. New Islamic financial institutions are being established ranging from the traditional banking institutions to more specialised financial institutions. This Islamic financial landscape has been supported by a well-developed regulatory, prudential, legal, accounting, framework and reinforced by the necessary research and development. Initiatives to promote greater awareness and education amongst Muslims and non-Muslims have also been intensified. In this recent decade, we have seen the financial globalisation of Islamic finance with the participation of both the authorities and the private sector. In the case of the former, attention has been given to developing the financial infrastructure, including the financial markets, institutions and agencies as well as establishing the necessary prudential and accounting standards. While the latter has included the borrowers, investors and institutions that participate in the process. Sovereigns, corporations and multinational and multilateral entities have accessed the international markets while the institutions and investors have been a source of financing. Indeed, these funds are either raised directly from international banking institutions or through bonds and equity issues in international markets.

At the core of a financial system of any country must lie an efficient and effective payment system as a means for clearing and settling payments. In modern economies, this function is already highly mechanised to support a sound and stable financial sector. It is vital that a real time settlement system for inter-bank funds transfer be implemented to reduce the credit and settlement risk in the financial system. It must be able to handle scripless debt securities trading, processing and settlement on a model that reduces counterparty risk. 4  BIS Review 51/2004  Conclusion As Islamic finance advances forward to become an important integral component of the international financial system, efforts need to continue to strengthen further both the international architecture and to enhance international cooperation and collaboration as well as to develop the domestic financial system to meet the changing requirements of a highly dynamic and rapidly evolving environment. Malaysia will continue to play an active role in this process. In our quest to build a viable and sustainable Islamic financial system, the aim is to contribute to the channeling of capital flows to productive investments, create wealth and promote trading activities, with the activities undertaken not just among Muslims but with the rest of humanity, Insyaallah. On that note, I wish you a successful conference. Thank you. BIS Review 51/2004  5