I want to look at one other aspect of the market over this quiet decade – distributional impact. Distributional effects are not a part of the Bank’s statutory primary objectives of price and financial stability. This is not because they do not matter. They certainly do, and access to housing is included in the Government’s economic policy, which the Bank has a secondary objective to support16. It is because these are issues primarily for elected authorities rather than technocratic ones, and there are more effective tools to address them. One cannot ignore that housing booms shift wealth towards existing and generally older homeowners and can therefore widen intergenerational inequity. The large increase in house prices in the decade leading up to the financial crisis came with a large expansion in mortgage debt. Much of the £ increase in household mortgage debt over that period represented borrowing by first time buyers and those moving up the housing ladder to finance an increase in housing wealth for those further up the ladder. Moreover, an increase in house prices often leads to higher rents which are predominantly paid as transfers from non-home owners to existing home owners, potentially even further restricting the ability of prospective first time buyers to put a foot on the housing ladder. As well as increasing intergenerational inequity, this shift in housing wealth also risks widening inequity within the younger generation going forwards as housing wealth is passed down within families17.

Of importance, Islamic financial institutions must be open to rethinking their traditional business models and approach to doing business. In particular, the openness to forge digital partnerships and strategic alliances has the potential for the co-creation of innovative solutions. Globally, 82% of incumbents are expected to increase fintech partnerships in the next three to five years. 2/3  BIS central bankers' speeches  Collaboration with the fintech community should therefore become the norm. For example, collaboration with crowdfunding and peer-to-peer financing startups can be a win-win growth opportunity. Through such partnerships, banks would be better able to service smaller businesses by referring potential borrowers not meeting their targeted credit profiles to these lending platforms. In return, these platforms can refer its borrowers that have gained scale to the banks for larger financing. Bank Negara Malaysia is supportive of the growth of fintech, including Islamic fintech. At the same time, as a regulatory body with a mandate for financial stability, we need to ensure that risks to the financial system and customers arising from innovations are properly managed. This is why we have developed the Regulatory Sandbox which allows new fintech solutions to be introduced in a live and controlled environment. It provides a “safe” environment where any risks and failures can be better managed. The time to market for new innovative products can also be reduced, which would otherwise be a hurdle under the traditional regulatory process. Its flexibility is also expected to better improve accessibility, affordability and attractiveness of financial products and services.