zeti akhtar aziz : big shift – traversing the complexities of a new world luncheon address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the khazanah megatrends forum 2012 : “ big shift – traversing the complexities of a new world ”, kuala lumpur, 2 october 2012. * * * the global economy has now entered into a period of slower economic growth despite the significant and wide ranging pro - growth policies that have been implemented across the world. why then has the world not been able to achieve a sustained long - lasting recovery? what has been holding back this prospect? in addition, the rapid and significant changes in the global environment have also brought with them new demands and new challenges. our understanding of the factors that are containing the global growth prospects and the consequence of the new environment will better position us to face the fundamentally new landscape and to manage its consequent challenges. let me first thank khazanah for the invitation to speak at this khazanah megatrends forum. the topic on the big shift that is being experienced in the world today is indeed highly relevant. while the international and national attention is currently focused on the immediate challenges of the global environment, equally important, however, is to recognise the long - term changes that will reshape our future. the first part of my remarks today will focus on the immediate challenges of the global economy, taking into account the fundamental factors that are likely to affect the growth outlook. the second part of my remarks will touch on the key imperatives to best prepare us for the new global landscape, so as to be better positioned to succeed and survive in this new environment. policy - makers in the world economy have continued to be confronted with policy challenges since the onset of the global financial crisis. while the policy responses have focused on addressing the origins of the crisis – on the extensive build - up of excesses, the over - leverage and over - indebtedness of the private and public sectors, the breakdown in the functioning of financial markets, the loss of competitiveness, and the loss in confidence in the financial system and the economy, the concern now is on achieving a sustained economic recovery that is accompanied by job creation. half a decade into the crisis, and this has yet to be achieved. in the recent months, the global economy has again experienced a broad - based moderation in growth from an already modest pace. this has stemmed

is after all, a market economy. with this in mind, the bank and securities commission malaysia ( sc ) have set up the mifc leadership council ( mlc ), an industry platform to lead efforts to advance mifc propositions as a global marketplace and international gateway for islamic finance. this includes initiatives to improve global competitiveness of malaysia's islamic finance industry, deepening financial linkages, expanding international opportunities and deliver more impactful financial innovation. to date, the mlc has undertaken a wide series of engagements across the industry and will be looking to coalesce these discussions into concrete focused initiatives for the industry. on that, i would like to invite and encourage your support and participation in these initiatives as well as the mifc agenda now spearheaded by the mifc leadership council. activating and deepening islamic financial markets 2 / 4 bis - central bankers'speeches the second priority is a critical success factor for growing regional financial intermediation. malaysia has significantly benefitted from sustained efforts to develop its own islamic financial market and islamic capital market. our islamic money market, which commands close to 40 % share of total money market, has grown in tandem to support islamic banking and finance which now forms 44. 7 % of total financing5. the government sukuk market is 49 % of the total government debt market while corporate sukuk comprise more than 80 % of the total5. efforts are now also directed towards building a financial ecosystem that can attract broader investor base while preserving market confidence. malaysian government sukuk is now tracked under global indices such as markit iboxx and jpmorgan gbi - em, secured with credit ratings from top rating agencies, and are promoted actively during international roadshows. malaysia also continues to expand access to non - resident participation in domestic ringgit - denominated sukuk and equity markets. additionally, enabling regulatory frameworks for active secondary trading of ringgit assets, with secure and reliable linkages to international settlement infrastructures like euroclear / clearstream are critical in supporting foreign investor participations in shariah - based securities. the bank is also working on a proposal for anticipatory hedging as part of our effort in advancing an orderly functioning hedging market aligned with shariah principles. this is one of the initiatives under the islamic financial market committee to further develop the islamic money market in malaysia. much of our own focus, thus is to further the development of ringgit islamic financial market.