schuler et al. ( 2015 ). see ari, kok, paries and zochowski ( 2015 ). plantin, g. ( 2015 ). harris, opp and opp ( 2014 ). bis central bankers ’ speeches interaction with financial cycles. this is also because cross - country spillovers tend to be stronger the more integrated financial systems are. they might thus gain in importance with the launch of the banking union. macro - prudential policies could be weakened or strengthened because of cross - border spillovers. spillovers depend on the behaviour of both borrowers and lenders following a macro - prudential policy action. positive spillovers reduce risks to financial stability, while negative spillovers raise these risks. let me give you an example. if a country ( say, country a ) raises capital requirements in response to excessive domestic credit growth, a neighbouring country that also experiences excessive credit growth ( say, country b ) might benefit from this measure. if financial markets are integrated, banks in country a will reduce their lending in country b, thus contributing to a slowdown in financial exuberance. however, if financial markets are segmented, or if financial cycles are not synchronised and country b is experiencing weak credit growth, the sign of the spillovers from the same macro - prudential measure may turn from positive to negative. negative spillovers clearly pose a threat to the effectiveness of macro - prudential policy. for policy - makers, it is therefore crucial to be aware of the possibility of such spillovers and their respective propagation channels, co - ordinate policies to the best extent possible and apply mitigating measures to minimise leakages. the sign and the strength of these spillovers depend on the type of macro - prudential instrument, the linkages between the two economies and their financial sectors as well as the level of the synchronisation of the cycles. to add another layer of complexity, the spillovers from ltv policy could be qualitatively different than those from capital policy. following the introduction of a ltv cap, banks may find it profitable to reallocate lending abroad, thus generating negative spillovers on the neighbouring country. based on the available literature, the empirical quantification of cross - border spillovers remains limited. some evidence based on the u. k. experience suggests however, that resident foreign branches increased lending after capital requirements were tightened for local banks. additional evidence based on

on impact. financial institutions, through its intermediary actions, can be an effective agent of change for businesses and economy. in 2018, a number of islamic financial institutions began adopting a change in their business philosophy. by embracing valuebased intermediation or vbi, more comprehensive financial solutions, beyond just financing, are provided. these may include assistance and advisory as well as capacity building opportunities to businesses in their journey to transition to a more efficient, environmentally friendly and sustainable business as part of financing. to illustrate, islamic financial institutions will play greater nurturing role in advocating sustainable practices among their client. they will drive programme with other strategic partners who share similar aspirations to provide services beyond financing. clients will be advised to adopt sustainable practices for example malaysian sustainable palm oil certification and necessary funding and technical advises will be provided to the clients accordingly. traditional credit standards are also being reformed – taking into consideration prospects of a proposed project to create positive impact on wider stakeholders and community. in adapting to changing economic environment, businesses must have in place adequate risk management and protection. this is key to ensure business sustainability. takaful operators offer a wide range of commercial protection schemes to help businesses build its risk management. these include protection against risks associated with natural disaster, weatherrelated events, payment default, professional indemnity and damage in crops, among others. for example, trade credit takaful solution to be launched in 2020 complements the wide range of trade finance solutions for importers and exporters that transact on an open account basis. islamic finance is a natural fit for halalan - toyyiban let me now move on to the final component – the underlying strength which ties the halal opportunity with islamic finance – synergy. at the national level, the government supports and recognises the role of islamic finance as an important tool to develop and grow businesses and smes. in the 2019 budget, the sme shariah - compliant financing scheme was established to strengthen the development of smes. under the scheme, the government has committed to subsidise 2 percent of profit rate or borrowing cost for total financing worth rm1. 0 billion. a number of other strategies are also being pursued to better position islamic finance solutions to meet the needs of halal businesses. the industry players have participated in mega events such as halal expo 2019, halfest 2019, and festival islam dan halal antarabangsa johor darul ta ’ zim 2 / 3 bis central bankers '