was greater reliance on the banking system for financing. with the advent of new financing instruments and supporting infrastructure, trading activity in the secondary market have also increased by more than three fold, with the trading volume now amounting to rm516 billion. a key development of the malaysian financial market is the enormous growth of the sukuk market. as a pioneer in the global sukuk market, malaysia has remained firmly established as one of the largest issuers of sukuk, with 62 percent of the world's outstanding sukuk having originated in malaysia. malaysia's lead is also reflected in the innovative and competitive structures that have been pioneered such as the exchangeable sukuk musharakah and sukuks based on istisna'and ijarah. all these augurs well for malaysia to evolve as an international islamic financial hub and as a centre of sukuk origination. riding through the global financial market uncertainties the enhanced resilience of our financial system during this challenging international financial environment can be attributed to the comprehensive reform measures undertaken over this decade which has contributed to reduce the impact of the global financial crisis on our financial system and our economy. the domestic financial markets have remained orderly despite experiencing greater volatility, higher outflows and lower trading volume at the height of the crisis. the financial sector has also remained solid and has continued its intermediation function without disruption throughout this period. a number of pre - emptive measures has also been initiated to ensure continued access to the bond market for funding. this includes the establishment of danajamin nasional berhad, a national financial guarantee insurer to provide credit enhancement for viable corporations to raise financing from the bond market. this initiative is expected to enhance the prospects for companies to tap the bond market. within three months of its operations, two submissions have been received with 30 more in the pipeline. these applications amount to a credit enhancement to raise rm8. 4 billion of bonds. a further initiative in this direction is the resumption in the operations of the corporate debt restructuring committee ( cdrc ), to facilitate the restructuring of debts, including private debt securities of the larger viable corporations. renewed optimism in the financial market it is now more than two years since the onset of the global financial crisis. the effects of the crisis on the asian economies began to be felt in the second half of 2008. measures to stabilise the financial systems in the advanced countries and the implementation of massive fiscal

banking union and the capital markets union has rightly emerged as one of the immediate priorities in strengthening 2 / 17 bis central bankers'speeches emu, 3 not least as such progress is seen as crucial in supporting macroeconomic adjustment in a monetary union. today it is fair to say that the euro area has lived up to the challenges posed by the existential crisis and euro area countries have displayed a strong commitment to emu. macroeconomic adjustment in emu has made significant progress, with countries implementing significant growth - enhancing reforms and correcting external imbalances, but this process has been difficult. countries most affected by the crisis were confronted with significant hardship, even though financial support provided by the union and its member states to countries facing acute financing difficulties prevented catastrophic outcomes and cushioned some of its impact by providing time for economic adjustment. looking forward, in order to sustain a high level of social welfare in the long term, it is essential for euro area countries to improve their capacity to prevent crisis and hence to ensure that macroeconomic adjustment progresses in a smoother way. the emergence of macroeconomic imbalances the crisis has demonstrated how persistent losses in competitiveness can translate into macroeconomic imbalances, eventually leading to a painful adjustment. spain ’ s experience during the crisis is instructive in this regard. with the start of monetary union, the disappearance of exchange rate risk premia and the unprecedented fall in interest rates facilitated capital inflows and encouraged risk - taking behaviour, resulting in a rapid rise in private debt and a property boom. the expectation of higher levels of income led to excessive consumption and investment relative to the supply capacity of the spanish economy. this continuous demand pressure generated a positive inflation differential vis - a - vis the rest of the euro area, leading to a strong appreciation of the real exchange rate and an erosion of price competitiveness. 4 when the crisis hit, the subsequent adjustment was severe – with unemployment rising above 25 percent, a rapid erosion of the fiscal position and a number of bank failures – leading to a significant contraction in both domestic demand ( see figure 3 ) and real gdp. the same was true for other current account deficit countries, such as portugal, ireland and greece. for countries with large current account deficits, the adjustment was painful. the correction of euro area macroeconomic imbalances was particularly asymmetric, with the bulk of the adjustment falling on current account deficit countries through a strong contraction in domestic demand, with limited support from a higher demand contribution from