zeti akhtar aziz : strengthening our future speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of the financial sector blueprint at sasana kijang “ strengthening our future ”, kuala lumpur, 21 december 2011. * * * it is my great honour to welcome you to sasana kijang for the launch of bank negara malaysia ’ s financial sector blueprint. on behalf of bank negara malaysia and the financial services industry, yang amat berhormat dato ’ sri, i wish to express our appreciation to you for your presence here this afternoon to launch the financial sector blueprint. this blueprint marks a new phase in the development of the financial system. it focuses on new areas that will strengthen the competitiveness and efficiency of the financial sector and its potential role in facilitating our ongoing economic transformation and greater regional economic and financial integration and thus to enhance malaysia ’ s long term economic growth potential. the blueprint themed “ strengthening our future ” builds on and reinforces the solid foundations that has been achieved in this decade. malaysia has benefited from a well developed, more competitive and well regulated financial system. the financial system emerged from the global financial crisis strong and resilient, and has continued to support our domestic economy even during these most challenging of times. the recommendations in the blueprint has taken into account the expected changes in the international and domestic environment and its consequent demands on the financial system in this next decade. it also takes into account malaysia ’ s aspirations to become a high valueadded, high income economy. within the global economic landscape, emerging economies will assume a more significant role. while emerging economies will continue to be affected by global developments, most are able to demonstrate resilience and are expected to remain on a growth trajectory. by 2030, emerging economies are projected to account for 60 % of total world output, from the current 40 %. at the same time, the economies and financial markets in the global economy and international financial system have become more interconnected as a result of greater crossborder trade and financial flows. the continued development and deepening of our financial markets and increased financial liberalisation in emerging economies will reinforce this trend towards greater interconnectivity. more recently, the financial sector has been the target of a renewed focus and priority by the international community. wide ranging financial reform measures have been introduced in the aftermath of the global financial crisis to address the weaknesses

that have surfaced during the crisis. several changes are also transforming the domestic environment. new domestic sources of growth, the greater role of the private sector in the economy, demographic changes, rising incomes and a growing middle class, and the accelerated pace of urbanisation cumulatively will significantly change the demands on the financial sector. these trends will also be affected by initiatives taken by the government to transform the economy in this next decade into a high value - added, high - income economy, the greater leverage on the advances of technology and the acceleration of the pace of regional financial integration in asia. the malaysian financial system enters this new environment from a position of strength. the successful implementation of the first financial sector masterplan in this recent decade has produced a financial system that is well positioned to respond to the new imperatives of the decade before us. our financial institutions are well capitalised with strong buffers and improved risk management and governance practices. significant efficiency gains have also bis central bankers ’ speeches reduced intermediation costs in an environment of greater competition. this is largely arising from the cumulative efforts to building strong institutions, the development of the financial infrastructure, and the strengthening of the regulatory and supervisory framework. this decade has also seen the enactment of wide ranging legislation that has given greater certainty and predictability in the financial system. this includes the central bank of malaysia act 2009 and the financial services act expected to be tabled in parliament in 2012 has strengthened the legal framework for the financial sector. it will also enhance the bank ’ s capacity to manage risks from financial intermediation activities that occur outside the banking system and provide enhanced powers for timely intervention actions. the enhanced intermediation during this decade has benefitted access to financing, particularly for small and medium enterprises, has also improved, both in volume and efficiency. by leveraging on the distribution networks of commercial banks, enhanced product and risk management capabilities, access to financing by this sector has increased at an annual rate of almost 20 % since 2005. the financial infrastructure in malaysia has also been significantly strengthened. malaysia has an effective financial safety net that includes a comprehensive deposit insurance system and institutional arrangements that provide avenues for advisory, redress and rehabilitation. innovations in payment systems and instruments as well as infrastructure for the issuance, trading and settlement of debt securities and the access improved market information has contributed to greater efficiency and has also enhanced the overall price discovery process. to support our liberalisation measures our payment infrastructure has also been enhanced to support cross - border trade settlements in local