heng swee keat : ensuring stability – international perspectives on creating an effective regulatory framework remarks by mr heng swee keat, managing director of the monetary authority of singapore, at the inaugural plenary session, world islamic banking conference, bahrain, 24 november 2008. * * * introduction good morning, ladies and gentlemen. i am honoured to speak at this opening plenary, following the keynote remarks by his excellency, governor rasheed al - maraj. i am also delighted to be in bahrain, recognised globally as one of the leading centres for islamic finance. besides having a core of active islamic financial institutions, bahrain also plays host to a number of organisations central to the development of islamic finance, including aaoifi, the lmc, iifm and the iira, and of course, this wibc. 1 the central bank of bahrain [ " cbb " ], a highly regarded regulator, has played a key role in spearheading the development of islamic finance. the cbb has scored many “ firsts ”, including the first central bank sukuk in 2001 2 and being the first country to develop and implement regulations specific to the islamic banking industry. the cbb has also established the waqf fund to finance research, education and training in islamic finance. there is much that the mas can learn from the cbb. the current global crisis – some root causes the theme of this session – having an effective regulatory framework – is of great relevance given the on - going financial crisis. the current financial crisis is unprecedented in terms of its scale, complexity, and speed of transmission. while the series of coordinated actions by financial authorities and governments have helped to stabilise the markets somewhat, sentiments remain fragile, and many of the underlying problems remain. many reasons have been offered about the root causes of the current crisis. let me just highlight a few of these. the first is the unprecedented levels of leverage taken on by global financial institutions coupled with very loose lending standards in the credit markets. consumers in the us were also highly leveraged. the high leverage enabled asset values and consumption to be raised to unsustainable levels. when sentiments finally turned, there was massive deleveraging. the second is that complexity magnifies risks. the proliferation of complex securities and derivatives had not diversified risk amongst different counterparties as was originally intended, but instead increased aggregate systemic risk throughout the financial system. not only banks and investment banks were affected but a whole range of

in service providers and critical infrastructures in the financial and payment systems. in june 2016, the cpmi and the iosco published a document titled guidance on cyberresilience for financial market infrastructures. 2 this document highlights the importance of the safe and efficient operation of fmis in the maintenance and promotion of not only financial stability, but also economic growth. this publication intends to give guidance to industry to enhance its cyber - resilience, and hopes to provide regulators and authorities with a set of internationally agreed guidelines to effectively support, oversee, and supervise fmis. regulators are encouraged to cultivate a culture of awareness and an understanding of the risks inherent in the cyber - environment. all participants should not only be aware of but also understand their role and the importance of improving their cyber - resilience position at every level within the organisation. in this regard, the sarb will host a conference on cybersecurity in august with the objective of creating a platform for various role players in the financial sector to further strengthen their cyber - resilience. globally, there has been a wave of innovation in the payment environment, ranging from mobile payments to real - time low - value payments. advances in technology and access to the internet have facilitated innovation in various payment technologies. the financial technology ( or fintech ) revolution has played a key role in the development of innovative and disruptive technology, and is changing the way in which we look at financial, payment, banking and mobile services, to name but a few. what we are witnessing at the moment is this : where inefficiencies are perceived within the system, savvy service providers find a technology solution to overcome the inefficiency and provide the service in a cheaper and more efficient manner. such innovation is especially prevalent in the payment, mobile, remittance and online environments, such as online shopping and e - commerce. although fintech is providing many exciting opportunities, it should be balanced by efficiency, safety and financial stability considerations. it is not the role of regulators to hamper innovation, but the sarb is jointly responsible for financial stability, which includes aspects such as cybersecurity, infrastructures, and a safe and efficient financial system. we therefore need to strive towards achieving a healthy balance when we respond to these developments. 2 available at http : / / www. bis. org / cpmi / publ / d146. htm bis central bankers ’ speeches recently, many central banks –