currency and cross - border liquidity support arrangements for financial institutions. today, malaysia also has a deep and vibrant bond market which is the largest in south east asia, and a comprehensive islamic financial system that is recognised as among the most advanced in the world. the bond market comprising of the conventional and sukuk market has trebled in size, providing businesses with alternative access to financing solutions including in multicurrency to meet a diverse range of risk and maturity preferences. the strengthened islamic financial institutions, the establishment of key financial infrastructure for islamic finance including the regulatory and supervisory framework have positioned malaysia at the frontier of islamic finance. the recommendations in the blueprint aim to build on this progress towards resulting in the development of a financial sector that will meet the economic and financial realities of this new decade. the financial system envisaged will be firmly anchored in the real economy in providing financial services that contribute positively to growth ; that offers a diverse range of products, services and institutions that cater to the financial needs of a broader spectrum of malaysian households and businesses ; will be reinforced by deep, liquid and efficient foreign exchange and money markets to complement the bond market ; that is more engaged with the region and other parts of the world ; that can contribute meaningfully to malaysia ’ s economic transformation ; and finally, a financial system that is inclusive in reaching malaysians across all social, geographic and economic stratas. it is envisaged that by 2020, the financial system is expected to expand from the current 4. 3 times to six times of gdp. correspondingly, the financial sector contribution to nominal gdp is projected to rise from 8. 6 % to between 10 to 12 % in 2020. more than half of total financing in 2020 will be raised through financial markets, while islamic finance will continue to increase in prominence, growing at a faster pace to account for 40 % of total financing. bis central bankers ’ speeches the blueprint has adopted an integrated approach that reflects a financial sector that has increasing linkages between the various sub - sectors in the financial system. the recommendations, in the blueprint are thus centred on achieving nine major areas : ( i ) effective intermediation for a high value - added, high - income economy ; ( ii ) the development of deep and dynamic financial markets ; ( iii ) greater shared prosperity through financial inclusion ; ( iv ) strengthening regional and international financial integration ; ( v ) internationalisation of islamic finance ; ( vi ) safeguarding the stability of the financial system ; ( vii )

greater recognition of collateral a second change, announced in november, is to expand the range of acceptable collateral to let banks that qualify for the internal - ratings based approach recognize physical collateral and trade receivables as a way of reducing their capital requirements. the committee is aware that small and medium - sized enterprises, such as the “ einzelkaufleute ” and “ gmbh, ” tend to pledge these forms of non - financial collateral when they apply for credit. by treating collateral in this way, the committee estimates that irb capital requirements on loans to smaller companies may fall by another 10 percent relative to the first change i mentioned. we face a challenge in determining which forms of collateral or trade receivables offer the greatest level of protection to banks compared to other forms. this is not an easy task because each type of collateral has a unique historical record in reducing loss, records that also vary according to country. moreover, banks in different countries manage collateral and trade receivables in very different manners. because of these differences, we believe that national supervisors are best suited to determine which sorts of collateral to accept in their respective markets. rather than having the basel committee draw up a comprehensive list of permissible instruments, we are developing a set of minimum criteria for national supervisors to implement. i believe, particularly in the case of physical collateral, that banks using the internal ratings - based approach must obtain a timely, third - party view of the collateral ’ s value. one test, for example, is that should the need arise, the bank must be able to dispose of it with relative ease. as a former commercial banker, i cannot see how any responsible banker would be able to sleep at night if these conditions are not met. on the other hand, it seems clear to me that if these conditions are satisfied, then the collateral does offer a bank protection against loss and banks will need to hold less capital against those loans. let me try to anticipate an immediate question you may have. what do we expect will be the net effect of the changes i have discussed? i believe that the impact of more risk - sensitive proposals will be very positive for small and medium - sized businesses in many countries. i understand that jochen sanio, the very capable president of the bakred and, as of the first of may, president of the newly established fsa, expressed a similar view at a recent parliamentary hearing. he pointed out that based on our current proposals, on average