abdul rasheed ghaffour : malaysia international islamic financial centre - uk business forum 2024 opening address by mr abdul rasheed ghaffour, governor of the central bank of malaysia ( bank negara malaysia ), at the malaysia international islamic financial centre ( mifc ) - uk business forum 2024, london, 10 september 2024. * * * assalamualaikum and good morning, first and foremost, allow me to express our gratitude to his royal highness sultan nazrin shah, for gracing our forum today and for his unwavering support and leadership in advancing islamic finance. his royal highness in various capacities including as the royal patron of the malaysia's islamic finance initiative and his global humanitarian involvements, continue to inspire all of us. over many years, his royal highness has been active in advocating for the transformative potential of islamic finance and social finance in addressing the pressing challenges facing the world today – extreme poverty, climate change, human displacement due to geopolitical conflicts, among others. just last saturday, at the 15th sc - ocis roundtable, his royal highness has called for restoring of humanity in finance, emphasising the importance of balancing more carefully the paramount goal of economic growth with the goals of environmental stewardship and social inclusion. like all of you here today, i look forward to the insights and perspectives from his royal highness'keynote address shortly. it is with great honour that i welcome all of you to the mifc - uk business forum. we gather here today not only to exchange ideas but to forge meaningful connections and explore what we can do together to catalyse islamic finance. malaysia and the uk have long sustained strong economic and financial ties. the uk has always been an important partner for malaysia. we hope that these strong interlinkages can pave the way for innovative collaborations in islamic finance, sustainability, and trade to further bolster our economies. let me first share some insights on malaysia's economic landscape and prospects that offer opportunities to investors. for many years, malaysia has carefully navigated unprecedented challenges – not just crises such as the asian financial crisis, the global financial crisis and the covid - 19 pandemic, but also the ever - evolving economic landscape, global and regional geopolitics, as well as our own shifting domestic landscape. through thick and thin, our financial market remained orderly, and our economic fundamentals remained sound, supported by resilient domestic demand and a robust external sector. in

economies of other advanced countries do better relative to ours. as other investments like equities regain their gloss the person who has bought a house to sell it to another buyer may find that the next prospective buyer has put his or her money elsewhere. when pension funds prosper again, that too will have the same effect. to those who say “ hold on, nothing is as safe as houses, ” i would say separate nominal from real house prices. real house prices are what matters. in our recent past there have been extended periods where real house prices have dropped, as illustrated. in the past price falls were often concealed by high inflation. also, as the graph confirms, when property prices really skyrocket real property - price deflation often follows soon after. rising house prices and, by inference, increasing rentals are by no means a certainty. as some new zealanders found in the 1970s, the late 1980s and to a lesser degree in the late 1990s house prices can fall in real terms. other countries, such as the uk, have experienced even more pronounced weakness in their housing markets at stages over the last 20 years. prudent property investors need to ensure their ability to withstand falling prices and rents at some time in the future. people thinking of borrowing to buy a rental property should also factor monetary policy into their calculations. if inflation starts to gain momentum in new zealand, interest rates, nominal and real, will have to be higher to keep that inflation in check. prospective buyers should ask “ could my gearing face that - would i stay above water come higher interest rates? ” to conclude, why as a central banker should i care about any of this? the narrow answer is that a stretched housing market contributes to inflation. however, the wider answer is that the stability of the new zealand economy and the security of new zealand households are linked in terms of risk concentration. for the wider economic interest and for new zealand households, spreading risk needs to be a higher priority.