First, at the recipient end, a crucial condition for living with financial globalisation is improvement of market structures to ensure that capital inflows are productively employed. That involves attention to structural issues, such as accountancy standards, bankruptcy laws, and governance questions. It involves appropriate sequencing of capital account liberalisation – and arrangements to ensure that the particular risks to the borrowing country, for example, attaching to volatile short-term inflows are properly recognised – and reflected in the price paid by the borrower. That in turn involves effective management of foreign currency assets and liabilities in particular, including management of their relative liquidity, by both the public and private sectors. It involves, also, ensuring that borrowers, and their creditors, are unambiguously clear as to who is ultimately responsible for the liability at the time it is taken on. It involves increased attention more generally to the soundness of financial systems – which is to be the subject of our discussion this afternoon. And perhaps above all it involves improved transparency – of policies, of standards, and of financial and economic data - to enable investors and lenders to make informed assessments of risks. But there is a great deal too that the international financial community can do, as it were from the provider end. This includes the intensive efforts being made, particularly by the IMF, to encourage sound macro-economic and structural policies – and greater transparency – in all IMF member countries.

Zeti Akhtar Aziz: Strengthening the financial infrastructure for SMEs in Malaysia Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Launch of Strategic Partnership between Credit Guarantee Corporation Berhad and the Islamic Financial Institutions, Kuala Lumpur, 6 February 2007. *  *  *  It is my great pleasure to be here this morning to witness the launch of the strategic partnership between the Credit Guarantee Corporation (CGC) and Islamic financial institutions. This strategic partnership will provide an important platform to the Islamic financial institutions to expand lending activities to the small and medium scale enterprises (SMEs). It therefore, marks an important initiative in the efforts to provide an increased range of financing products to SMEs in addition to enhancing the access to financing. A key national agenda of the Government is to promote a strong and dynamic SME sector which would contribute to ensuring sustainable and balanced economic development. The development of diverse and competitive SMEs will also promote greater resilience of the economy. The SMEs also represent important "incubators" of entrepreneurial talents that will provide for the potential for the development of larger Malaysian corporations. The SMEs can expect to represent an increasingly important source of endogenous growth and employment. The importance of the SME sector to the national economy is evidenced by the fact that it constitutes 99.2% of the total business establishments, employs about 5.6 million people, and contributes about 32% of gross domestic product.