to these perceptions as misleading, with little reflection of reality. what is worrying is that, such perceptions and sentiments, if left unaddressed, would end up shaping reality. for one, a look at the correlation between oil prices and ringgit tells a completely different story as the correlation has been low in recent years. this is not surprising given that the relationship between oil and ringgit has been declining as malaysia has come a long way in diversifying its economy. the country is no longer reliant on oil and gas for economic growth. our growth is now driven largely by domestic consumption. on the fiscal side, efforts were taken to diversify revenues with the introduction of the goods and services tax and rationalisation of subsidies ; similarly, for the offshore ringgit pricing, the reality is that, it is driven by speculation and non transparent price discovery. ringgit is not an internationalised currency and therefore any offshore trading and pricing should have no fundamental basis. in fact, it is illegal. the sizeable speculative activities and herd - behaviours that take place in the offshore market have considerable influence over offshore ringgit pricing. consequently, the offshore market significantly misprices the ringgit. on the other hand, onshore pricing is based on real demand and supply that reflects real economic activities. despite what market had perceived, the domestic market volume has increased. it continues to record robust activities in the financial market, reaching daily volume as high as usd16. 1 billion compared to usd14. 1 billion recorded in 2016, the onshore market volume on forwards and swaps alone has surpassed the observed offshore forward market volume which now records an average of usd1. 0 billion a day. in addition, there is a narrowing of bid - offer spreads that would indicate an improvement in liquidity. anecdotal evidence suggests that market participants, including corporates, continue to access the market to meet their business needs ; risk exposure from high non - resident participation in the onshore market has effectively reduced. risks from high non - residents holding have significantly subsided as footloose short term positions have exited the market in the early part of the year. the non - resident investors that remain in the domestic market comprise mostly of long term investors. they are less affected by short - term market dynamics. their investments tend to remain stable and at times act counter cyclically to short - term investors, providing stability to the overall bond market ; 4 / 7 bis central bankers'speeches on reserves, our level is

: islamic fund and wealth management the sukuk market has been an important source of financing for productive investment activities, while for investors it provides potential for diversification into new asset classes. the second pillar in the malaysia islamic financial hub is the islamic fund and wealth management industry. malaysia is centrally located in the asean region that has a population of 570 million. it is also positioned centrally between the major asian economies of india, china, japan and korea. malaysia has always been a highly open economy in trade and investment activities and has been a major recipient of foreign direct investment for more than a hundred years. as a destination for financial investment, the malaysian capital market offers a wide range of world class financial products. more than 85 percent of the listed companies in the equity market are shariah compliant, representing about 60 percent of total market capitalisation. other investment opportunities include in shariah - compliant real estate investment trusts ( reit ), in unit trusts and in the islamic exchange traded fund ( etf ). the capital market intermediaries in malaysia, that is, the investment banks and islamic fund management companies have had a key role in supporting the development of this industry. both retail and wholesale products are being offered in ringgit and non - ringgit currencies. there is also no restriction in investing 100 per cent of the funds abroad. the foreign exchange administration rules now allow for the free mobility of inward and outward movement of funds. pillar 3 : international islamic banking the islamic financial system has also been extensively liberalised to allow for the entry of foreign islamic financial institutions that offer both domestic and international banking business. in addition, the foreign equity ceiling in islamic financial institutions has been raised to a maximum of 49 percent as part of the effort to promote strategic alliances. the islamic banking business in foreign currencies can be conducted by the international currency business units ( icbus ) that may be set up within existing financial institutions and the international islamic banks. such international islamic banks may be established as either a branch or a subsidiary. currently, about 16 percent of total assets in the malaysian banking system is shariah compliant. pillar 4 : international takaful business the fourth pillar is takaful and retakaful business. there are now eight takaful operators, several of which are joint ventures with foreign shareholding that conduct both domestic and international takaful business. in addition, licences have been granted to three reinsurance players to undertake retakaful business in malaysia. several