practices. this resulted in an underestimation of the risks involved and the capital buffers that were necessary. the ensuing turmoil in the financial markets that followed was increasing illiquidity in the financial markets and the subsequent breakdown in the functioning of the markets. as this continued, it has translated into stress and insolvencies in the financial sector. in both crises, this precipitated a sudden pull back in bank lending. the ensuing credit crunch magnified further the damaging impact on the economy. in asia, the economic contraction was severe in the range of minus 7 % to 13 %. in the current financial crisis, however, the spillover impact of the effects on the economy has yet to be fully felt. in the asian financial crisis, it ran its full course with the rapid price adjustments in most asset markets taking place within a period of just over a year. in asia, there was limited potential to reduce interest rates in an environment that was vulnerable to capital outflows. the focus of policy in asia was therefore on the resolution of the banking sector and to restore the functioning of the intermediation process. in most of the crisis affected economies in asia, this strategy produced positive results and growth resumed within twelve to eighteen months. financial crisis and islamic finance in the midst of the unfolding of the global financial crisis, it is useful to review the foundation and structures of the islamic financial system to assess its resilience in withstanding the impact of the current and future crises. in taking into account the dynamics of the crisis and the potential implications for islamic finance, two important dimensions are key in undertaking the assessment. the first key dimension highlights the inherent ability of islamic financial system to deal with the test of such crisis. islamic finance is well - supported by two essential features which serve as pillars to islamic financial transactions. firstly, islamic finance encourages business and trade activities that generate legitimate profits, subject to an explicit requirement of materiality and validity of the transaction. this requirement ensures that the funds are channelled into real financial business activities, reinforcing a close link between financial and productive flows. this reduces the islamic financial system from over exposure to risks associated with excessive leveraging and imprudent risk taking. in islamic financial transactions, money is not a commodity, but a medium of exchange, a store of value and a unit of measurement. money represents purchasing power and cannot be utilised to increase the purchasing power without any productive activity. secondly, islamic finance encourages business transactions

adnan zaylani mohamad zahid : re - inventing payments - the future of financial services keynote address by mr adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the malaysian e - payments excellence awards ( meea ) 2019, kuala lumpur, 31 july 2019. * * * it is my pleasure to be speaking here today, at such an exciting time for our payments landscape. malaysia ’ s progress in migrating to e - payments has been promising. in less than a decade since 2011, we have reduced cheque usage by half to 101 million in 2018. e - payment acceptance points such as point - of - sale ( pos ) terminals have more than doubled to 16 terminals per thousand inhabitants in 2018. more merchants are also accepting qr payments with over 400, 000 registrations recorded to - date. meanwhile, e - payment transactions have almost tripled to 125 transactions per capita in 2018. at the same time, new business models are emerging. we estimate that 40 % of fintechs in malaysia are in payments or payment - related services – making it the largest segment. the ewallet space has been particularly vibrant, contributing to rapid growth in mobile payments. from 2017 to 2018, mobile payment transaction volume had increased twenty - fold from just below two million transactions to over 34 million transactions within a year. keeping these developments in mind, allow me to share three broad priorities in taking malaysia ’ s payments journey to greater heights. greater scope to enhance inclusivity and quality of e - payment adoption the first priority is to improve the quality of our e - payment migration to be more inclusive, broadbased and sustainable. the good progress so far means that malaysia has a solid foundation for more widespread adoption of e - payments. e - payments are increasingly prevalent, with adoption picking up across a wide range of use cases. a wider network of merchants is also increasingly open to accepting e - payments as a possible driver of efficiency gains and revenue growth. importantly, these encouraging developments have been contributed, in part, by the market reforms and incentive structures implemented since 2013. these measures have corrected market distortions and facilitated the pooling of industry resources to continuously enhance the payment infrastructure and services. nonetheless, there are opportunities for more inclusive and broad - based adoption. studies have shown that cash usage is still prevalent with more than 80 % of malaysians reportedly using cash in a majority of their everyday spend