Consolidation will be encouraged both in the banking and non bank sectors through steady increase in capital requirements. Priority will be attached to achieving sustainable structures in both the banking and non bank sectors in an orderly manner. It is our intention to send out the clearest possible signal that there will be no regulatory forbearance. We also continued to take measures to strengthen the payment and settlement infrastructure in line with our statutory responsibility of developing an efficient and stable national payment and settlement system capable of catering to the country’s growing payment needs. To promote digital payment mechanisms in the country, a national standard for QR code based payments was introduced during 2018, while progress was made in establishing the National Card Scheme. The Central Bank also continued to perform its currency 8  management function to facilitate smooth transactions in the economy, while taking measures to preserve the quality of currency notes in circulation. Priority was also attached to strengthen the Central Bank’s agency functions in 2018. Public debt management was carried out in a way that the government’s financing requirements were met at the lowest possible cost with a prudent degree of risk, while aiming to maintain debt sustainability. There was continued focus on sustaining the transparency and efficiency of the auction system for Government securities as well as on developing a viable medium term debt management strategy.

As Islamic finance facilitates greater financial and economic interlinkages between jurisdictions, this enhanced international dimension will bring about a new set of challenges presented by the fundamentally different operating environment of heightened competitive dynamics, greater uncertainty, and more complexity. This will require greater collaboration and cooperation at the global level in the endeavour to preserve global financial stability. The recent crisis has highlighted that financial integration across borders needs to be accompanied by international cooperation and coordination to prevent regulatory arbitrage across borders and the risk of implications for contagion. A stronger collective effort needs to ensure that Islamic finance is subject to consistent, high-quality regulation across borders through the application and enforcement of the international prudential standards promulgated by the IFSB. This would reduce the opportunities for regulatory arbitrage, which in turn, will contribute to a more successful international integration of Islamic finance. Beyond the prudential standards, a higher level of cross-border vigilance is pivotal to allow for appropriate and decisive actions to be taken pre-emptively to deal with any imminent financial distress. This underscores the importance of adequate coordination and cooperation among supervisors across borders in strengthening their responsiveness to risks associated with markets interconnectedness. In particular, more transparency is essential towards understanding the ramifications of national actions or inaction and the potential spillover effects from one country to another, whilst equally important is to recognize that financial regulation and intervention are subject to country-specific circumstances and hence, must fall within remit of national autonomy.