Japanese investments have also been important in making Malaysia part of the regional production network. To this day, Japan remains a significant partner in trade and investment for Malaysia. While Japan's economic relationship with Malaysia through trade and investment is wellestablished, going forward there is significant potential for strengthening the financial linkages. In this recent decade, Malaysia has significantly transformed our financial sector. The restructuring, consolidation and reform of the financial sector has strengthened the capacity, flexibility and resilience of the financial system. In addition, there has been the development of several new segments of the market, including the bond market and Islamic finance. The Malaysian bond market is the largest in South East Asia with a vibrant private debt securities market. Malaysia has also continued to progressively liberalise its already open financial system to further enable free flow of funds into and out of the system. This transformation has opened up the potential for a range of new opportunities for participation in the financial sector in Malaysia and for facilitating greater financial flows within the region. New linkages and opportunities offered by Islamic finance This decade has also witnessed a rapid evolution and global expansion of the Islamic financial services industry. Malaysia has developed a comprehensive Islamic financial system that operates in parallel with the conventional financial system. More recently, its international dimension has gained significance as Islamic finance is becoming an increasingly important part of the international financial system.

Also, and in particular, we must determine whether the eligibility requirements are effective for supporting the most vulnerable groups, and whether its design offers sufficient incentives for beneficiaries to join the labour market. An additional matter is the problem of the affordability of rental housing. International evidence shows that policies aimed at increasing supply are the most effective. Some countries have opted to combine the introduction of public guarantees with tax incentives for the private-sector development of rental housing. It is also crucial to ensure legal security for owners. Turning to European economic policies, despite the response during the crisis, there are structural shortcomings in euro area governance that need resolving. From the standpoint of crisis management, resolving these shortcomings would also be important, given that we cannot rule out the fact that the impact of the pandemic on the economy, and its persistence, may be greater than expected. We must persevere with a European response to this crisis. Completing the Banking Union with the approval of a fully mutualised European deposit guarantee scheme would contribute decisively to ensuring financial stability in the euro area, both in the coming months and in the medium term. Deepening the Capital Markets Union project would likewise be crucial. And a further priority is to analyse the suitability of European bank resolution and winding-up regulations to a hypothetical systemic crisis, and to set in place a common procedure for the administrative winding-up of credit institutions.