muhammad bin ibrahim : pilot platform for cross - border investment and settlement of debt securities remarks by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the press conference for the launch of the pilot platform for cross - border investment and settlement of debt securities, jointly with the hong kong monetary authority and euroclear bank, hong kong, 13 march 2012. * * * the world as we know is changing. many aspects of how the global financial landscape will change have been discussed. one key area of focus has been the uneven growth momentum across the world, which is expected to persist for some time, and this development will have an impact on the trends and direction of the flows of trade and capital across the world. in essence, the nature of trade and capital flows will be significantly different from what we have experienced in the past decades ; gross capital flows from across the globe between the east and the west, the north and the south, will be larger in size and more robust, going forward. these developments may pose risk in particular, to open economies like malaysia and hong kong. a key safeguard to manage the risks that may arise from this transformation would be by strengthening our financial systems, to further develop the capital markets and to strengthen the regulatory and supervisory frameworks. in the asian region, accentuating this global transformation are the rapid regional economic and financial integration and the expansion of domestic demand. while these developments are likely to further reinforce the strong intra - regional trade and investment linkages that are already in place, a key aspect of the increased financial integration in asia is the need for more efficient intermediation of funds within the region. this includes the mobilizing and channeling of some part of the sizeable savings in asia to productive investments. the average savings rate in asia is 35 % of gdp and asia as a group has a total of about usd5 trillion in foreign reserves. even if we invest 1 % of this amount, the impact would be significant. with further liberalisation of the financial sector and the capital account, and the increased linkages of the national payment systems in asia, financial flows within the region is envisaged to increase. this trend is reinforced by the increased presence of regional institutions in the individual countries ’ domestic financial systems and asia ’ s favourable economic prospects and the increasingly more developed and sophisticated financial markets. this region has already experienced an increase in intra - asian financial flows. one should expect that given the uneven growth paths across economies in the next few

for oversight of financial sector in an integrated manner. besides coordination and cooperation among regulators, there is a need for consolidated supervision framework for financial institutions, guidelines for consolidated public financial statements and application of regulatory prudential limits on group wide basis and coordination to examine the intra group linkages with industrial and commercial entities. while conventional and islamic financial industry would have to adopt similar approaches to integrated supervision, it has to be recognized that fund management, as used here, refers to management of islamic mutual funds and modarabas. a number of banks have formed subsidiaries and floated modarabas like nbp, hbl, abl, habib metropolitan bank, etc. no islamic bank has yet floated a modaraba. the latter is a relatively nascent industry and hence the targets should be modified to match the ground realities. v. conclusion ifsb ’ s ten year roadmap has highlighted the cross sector nature of ifis and the resultant need for supervision to evolve accordingly. it is in recognition of these factors that ifsb has sought to broaden its membership to securities and insurance supervisory authorities as full members of ifsb. ifsb ’ s efforts for developing islamic regulations as well as accounting, auditing and governance standards will facilitate adoption of unified principles for the development, operation and regulation of islamic financial services.