BIS central bankers’ speeches  1  petrochemical supplier to China’s textile industry, and China’s exports to the GCC are estimated to be growing by 30% annually.2 Second, financial flows between the two regions are increasing significantly. With the rapid accumulation of foreign reserves from the unprecedented oil windfall in recent years, GCC countries are looking to rebalance their portfolio of foreign investments with a greater allocation to Asia. McKinsey observed that over the period of 2002–2006, about 11% of GCC’s capital outflows were to Asia. They estimated that this share could nearly double to 20% by 2020. However, Asia in turn is also investing into the Gulf, particularly in infrastructure projects in the GCC. There is now rising FDI from China and India in sectors such as construction, tourism, telecommunications, software and engineering services, garments, chemical products, and food.3 Third, there are now increased numbers of financial intermediaries to facilitate cross-border financial transactions between the two regions. Major Middle East Islamic banks have established operations in Malaysia. Leading banks from the GCC are now using Singapore as a base for expanding into East Asia and to facilitate Asian business expansion into the Middle East. Malaysian and Singapore banks are in the Middle East to seek business opportunities. Together, the presence of all these active players makes for a vibrant Islamic Finance ecosystem in Singapore. Cross-border Islamic transactions set to take off Going forward, in the next phase of growth, I am optimistic that we will see greater proliferation of cross border Islamic transactions.

And our vision for Thai commercial banking and financial services – if it is to be useful – must consist of two parts within a single integrated framework: one for our main banking activities and the other for those in rural areas. As we look at cross-country experiences on commercial banking and financial system inquiries, we were drawn toward the experiences of Australia, Canada, and South African. The South African’s Standard Bank has been quite innovative in using new technologies to reduce cost of providing banking services to the urban poor who were formerly thought of as un-bankable. Similarly, the Canadian Financial Services Taskforce put much emphasis on “ensuring highest standard of quality and services to consumers, regardless of their income, and regardless of where they live; urban or rural, and also to individual businesses, whether they are large or small”. On the other hand, the emphasis of the Australian Financial System Inquiry on “the facilitation of financial conglomerates to realize economies of scale and scope as well as streamlined regulatory structure base on functional not institutional distinction” will become more and more relevant in the future as consolidation and diversification within our financial system lead to similar types of business model. Coming up with a broad vision is comparatively a simple task; the real challenge is to work out the details of how we plan to modernize of our financial system. Here, we have to articulate our vision and implementation strategies together from both practitioners’ and regulators‘ point of view.