past few decades to significantly strengthen the financial system, the banking industry in malaysia is managing this transition from a position of strength. the capitalisation of the banking system is at its highest level of 16. 5 %. the combined excess capital of banks above the regulatory minimum level stands at over rm120 billion. the banking system liquidity coverage ratio is also comfortably above 120 % against the current regulatory minimum of 70 %. this strong position has been an important element to facilitate orderly adjustments in transitioning towards global standards without disruptions to financial intermediation, thus ensuring the smooth flow of financing to the economy. to enhance malaysia ’ s growth potential, several initiatives had been identified that will help boost productivity, improve the income - earning potential of malaysians and expand opportunities in new markets. building from malaysia ’ s leading position as an international islamic finance centre, efforts to promote the sustainable growth of islamic finance supported by a dynamic ecosystem will create opportunities for high income employment. at the same time, asean integration remains high on bank negara malaysia ’ s agenda. meeting the e - payment targets that bank negara has set is also vital to enhance our economic efficiency, competitiveness and productivity. and we will continue to direct efforts at ensuring that all malaysians can participate effectively in the financial system. bank negara will also continue to work with the government on a range of economic priorities to sustain the malaysian economy on a steady growth path. this includes the continued support and development of smes, and improvement in access to affordable housing. an area that demands greater attention and coordination going forward is the ‘ sharing economy ’. we have already seen how the likes of uber and airbnb have changed the business model of the transport and hotel sectors, and enhanced the earning potential for asset owners, lower costs for users, and drive innovation and service quality improvements among incumbent providers. they can also bring important benefits for the environment through the reduction of wastage and control of over - consumption. similar innovative trends are also emerging within the banking and finance sector. to reap the benefits of technological advancements, bis central bankers ’ speeches the bank will work closely with relevant agencies and innovators in this space on new ways of delivering new products and services. i would like to take the opportunity this morning to talk about some of the measures that bank negara malaysia is taking to support growth in the financial services sector, encourage innovation and strengthen resilience. my remarks will touch on the areas of regional financial integration, fin

this recent two decades. our bilateral trade with china is now seven times higher than the level in the early 1990 ’ s. our economic relations have also evolved and expanded beyond the area of trade – into the services sector, particularly the financial sector, tourism and education. china is among the top five tourism markets for malaysia and chinese nationals represent the largest foreign student population in malaysia ’ s private universities and colleges. bilateral investment is also gaining importance, notably with the two recent government - to - government agreements, involving the establishment of an industrial park in both countries. the cornerstone to the strength of our bilateral economic relations is the ability to continually harness the synergies and economic complementarities that exists between our economies. the use of renminbi for trade settlement provides a natural hedge for businesses with renminbi obligations. it also generates cost savings and minimises exchange rate risks, in particular, it reduces the exposure to exchange rate fluctuations of a third currency. while the dollar will continue to remain an important currency for settlement of trade obligations, the availability of renminbi would provide companies an additional currency for such trade settlement. bis central bankers ’ speeches the benefits to be gained can be significant given the large and increasing trade base with china which stood at rm167 billion in 2011. by undertaking the transactions in local currency, exporters and importers in china would be able to eliminate the hedging and conversion costs. the reduction in transaction costs for the exporters and importers will contribute towards more competitive pricing for both exporters and importers. the full potential benefits are however expected to be realised in stages. the benefits will rise as the trade volume settled in renminbi increases and reaches a critical volume in terms of size which will in turn allow for the realisation of economies of scale. for the renminbi to be considered an option for both exporters and importers to settle their trade obligations in addition to the major currencies. there needs to be an efficient and cost - competitive source of financing in renminbi and a diversified investment avenue. in particular, it is recognised that discernible progress in three areas are needed to be put in place at an early stage to support the use of renminbi, that is, to improve access to renminbi liquidity, to have the supporting infrastructure and framework and to provide information on the use of the renminbi for trade and productive investment transactions. more than three years ago, in early 2009, the bank