The region will also be faced with an ageing population in the years ahead. With rising affluence, coupled with the need to achieve higher levels of income to support the increasing longevity, Asian consumers will increasingly demand innovative, better quality financial products and services. At another end of the product spectrum is the scope for enhancing financial inclusion and reducing inequality for the traditionally underserved, such as poor households and small and medium-sized enterprises (SMEs). To unlock the potential of this segment as a driver of growth not only requires product innovation that delivers cost-effective, high-quality and innovative instruments, but also the use of new business model and technology to expand the reach of financial services, especially in poor and remote areas. Second, the strong growth of Islamic finance across Asia in the recent years is another trend that is characterising the region. This dynamic segment will continue to offer strong growth  BIS central bankers’ speeches  1  prospect going forward, backed by its increasing importance as a tool for enhancing financial inclusion and reaching out to the underserved segments, the growing demand for sociallyresponsible investment and ethical financial services in this post-crisis era, and the increase in the wealth of individuals in Asia. Islamic finance has also proved to be a competitive and innovative financial intermediation channel that could strengthen global financial and economic linkages, led by the high growth segment of the sukuk market which has now become an important avenue for international fund raising and investment activities.

Our staff assesses the safety and soundness of domestic banking institutions and operations of foreign banking organizations in the district through onsite evaluations and offsite financial analysis and surveillance. One of our fundamental responsibilities is to ensure that each institution has in place the appropriate risk identification and risk management processes that are necessary for prudent banking. We also analyze issues and industry developments to identify emerging risks and to contribute to the development of domestic and international supervisory policy. I’ll return to a discussion of emerging risks later in my talk. BIS central bankers’ speeches  1  The Supervision Group at the New York Fed works with our colleagues around the Federal Reserve System to develop and implement the System’s supervisory programs. This includes working through governance structures like the Large Institution Supervision Coordinating Committee (LISCC) that oversees supervision for the largest, most systemically important institutions in the U.S. We are also involved in similar System-wide committees for other types of institutions such as community banks, regional banks, foreign banks, and other large banking institutions, as well as consumer protection. I’ll speak mostly today about our supervisory responsibilities for the largest firms, but will note that we recently hosted a conference at the New York Fed focusing on the role of community banks. For the largest firms, we actively participate in System-wide horizontal examinations such as the Comprehensive Capital Analysis and Review, or CCAR, which is the annual process for evaluating capital adequacy of the largest firms that began last week.