I would not wish to conclude these considerations on the growing importance of the European component of our financial system without referring in particular to the euro area financial market. Indeed, financial integration is even greater for the European countries making up the euro area: their banking systems draw on a common pool for their funds, through bank loans, medium-term financing  BIS Review 67/2007  7  (whether subordinated or not), securitisations and mortgage covered bonds. The existence of this integrated market for the euro area has allowed certain financial systems in the area to finance their economy’s upturn with the funds from other financial systems operating with less pronounced cycles. This is a most favourable development as it allows financial institutions with surplus funds to earn more efficient and higher returns, thereby sustaining the profitability of their business, while providing demanders of funds with more stable financing for their most profitable lending business. Evidently, the outcome for the euro area economies is a more efficient use of financial resources, which are routed towards the most productive activities. Let me now analyse in greater detail the situation of Spanish deposit institutions. As earlier stated, their banking activity grew notably in 2006 both as regards lending to corporations and to households. This sizeable increase in activity is one of the reasons behind the highly favourable earnings performance of Spanish institutions. However, if activity were to slow in the future, income statement margins might suffer.

Zeti Akhtar Aziz: Building financial systems for sustainable development Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Global Ethical Finance Forum “Building Financial Systems for Sustainable Development”, Edinburgh, 1 September 2015. *  *  *  It is my distinct pleasure to speak at the Global Ethical Finance Forum here in Edinburgh. I would like to warmly thank the Scottish Government and the Middle East Global Advisors for the kind invitation for me to speak at this forum. It is a privilege to be here in the company of this distinguished and diverse gathering of professionals from the various fields that are prioritising ethical finance for sustainable development. The discussion on ethical finance that supports sustainable development is timely. In this recent decade, we have had to deal with a financial crisis of unprecedented global proportions that has stemmed in part from the prevalent ethics and culture in the financial services industry. In this period, we have also witnessed significant occurrences of misbehaviour and ethical lapses surface in the financial services profession, including the manipulation of reference rates and deliberate compliance failures. Since the global financial crisis, we have now had several years to reflect on these weaknesses and to institute the much-needed reforms that have prioritised resilience and stability. Having made important progress on this front, it is timely to direct our attention to developing more enduring solutions that will place the financial sector firmly back in the service of society.