Bandid Nijathaworn: East Asian financial markets – some thoughts on the way forward Speech by Mr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at a high level panel on “East Asian financial markets: the next frontier” seminar organised by the World Bank and Hong Kong Monetary Authority, Hong Kong, 22 June 2006. *  *  *  Thank you Mr. Chairman, First, let me thank the World Bank and the Hong Kong Monetary Authority for the invitation. It is always a pleasure to be here in Hong Kong, and I should also congratulate the organizer for putting up what looks like another important and useful seminar. My task today is to speak on East Asian financial markets. In the recent years, I think there is no disagreement that the economies and the financial markets in East Asia have gone through an important phase of transformation and growth. So, it is ideal that we do take stock and think ahead on how things should best evolve going forward, so that the region’s economic potentials would be best leveraged, and to see what role can the region’s financial markets play. Given the limitations of time, I want to use this opportunity to make just two points. The first is the issues that are currently being discussed in the region on the areas that we need to do more in developing financial markets in East Asia. And the second is my view on the role that policy can play in supporting future developments.

This is an essential 2nd task not only for the development of Islamic Financial services but also for their integration. Each country will have to look at the legal and supervisory structures for Islamic Finance. However, inconsistent standards, in areas such as legal documentation and settlement of unresolved issues, can inhibit the growth of the Islamic financial services sector across borders. Conversely, when consistent standards are applied across jurisdictions, the costeffectiveness of Islamic financial service operating across borders improve. It also improves the attractiveness of the institution’s products to international investors, regardless of the  1  Islamic Financial Services Industry Development Ten Year Framework and Strategies. This was a joint initiative between Islamic Financial Services Board, Islamic Research & Training Institute, Islamic Development Bank and Islamic Research and Training Institute. 2  BIS Review 63/2008  country of origin. A significant challenge today is the need for greater convergence of rules and practices in Islamic Finance. In this regard, I commend the work of international standard setting bodies for Islamic Finance – AAOIFI, IIFM, IDB and IFSB. For example, IFSB’s recent publications on corporate governance, disclosure and capital adequacy standards are very useful. It is important that as regulators, we participate in appropriate standard-setting international organisations, and work towards the convergence of rules and practices across jurisdictions. Where convergence is not possible, we can work towards mutual recognition of those rules. The Ten Year Framework and Strategies also highlights the need to ensure tax neutrality between the Islamic services providers and their conventional counterparts.