zeti akhtar aziz : forces of change keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the financial industry conference 2010, kuala lumpur, 3 november 2010. * * * it is with great pleasure that i welcome you to this year ’ s financial industry conference. one year hence from our conference in 2009, the world is still confronted with the same challenge – achieving a self - sustaining economic recovery. the encouraging signs of recovery that emerged a year ago have now given way to increasing uncertainties on the sustainability of this global recovery. considerable uncertainty also remains on how the announced regulatory reforms will be implemented and on its consequential impact on growth and on the financial intermediation process. in addition, market conduct challenges, the uncertain outcomes of the unconventional and exceptional measures as well as the considerable pressure on the public finances have added to the rising uncertainties on the sustainability of global growth. i. economic outlook as the effects of the massive policy support begins to wear off, growth in the advanced economies is slowing, weighed down both by crisis originated factors and structural issues. unlike in the early part of the financial crisis, policymakers in the advanced economies now have limited policy flexibility to undertake further measures to support growth. amid these increased uncertainties, there has been heightened volatility in the international financial markets, arising in part from increased sovereign credit risks and, more recently, the sharp movements in the major currencies in the foreign exchange markets. in contrast, the recovery in the emerging market economies, in particular asia, remains robust, with the potential for relatively strong growth to be sustained. while most governments in asia had an important role in stimulating the economic recovery, private sector activity has been revived and is now having a greater role in driving the economy. also, with rising intra - regional trade, external demand from the region is providing additional support to growth. amid this favourable growth prospects, the region however is also confronted by a number of challenges. as highly open economies, the weaker global environment will, and indeed, has already resulted in a moderation in external demand. in addition, the divergence in growth prospects between the advanced and emerging economies, has precipitated surges of capital inflows, in particular, to asia. this could in turn lead to the risk in the build - up of destabilising imbalances in our economies. asia today, is however, in a better position to address these

another example is the collaborative project with the department of statistics malaysia to conduct the baseline census of establishments and enterprises in 2005. the data gathered from this initiative enabled the policy - makers to have a much more detailed profile of the sme and micro - enterprise segments of the economy. the insights gained led to a new understanding of the sme business landscape, and the launch of a national strategy for sme development. specific strategies could be developed, and the availability of data helped in having more constructive dialogue between different stakeholders. we also note that relatively new policy areas for financial inclusion require better data that enable validation of policy stance, or in some cases change in policy direction. inadequate or inconclusive data in areas such as measuring financial literacy, consumer awareness and financial education means that it is difficult to assess the cost and benefit of the proposed policy framework and its impact on financial inclusion. conclusion allow me to now conclude my remarks. the successful implementation of policy work in the area of financial inclusion requires the availability of quality data. the fact that this area still remains relatively unexplored, compared to the availability of data for corporate business, financial markets and other more sophisticated aspects of finance, clearly suggests that much work remains to be done. the magnitude and scope of the topic also requires a diverse group of policymakers to collaborate on a long - term basis. the establishment of a working group to improve the quality of financial inclusion data is therefore most timely, and will benefit policymakers in making better and more informed policies, as well as tracking the outcome of policy initiatives. in addition, it may also serve to increase the visibility new issues areas which are currently not being given sufficient priority by policymakers. i would also like to encourage the working group to consider, in the longer term, the development of some form of a composite financial inclusion index. the composite index will benefit everyone by providing a broad measure of trends, facilitate comparisons between distinct segments and create a benchmark for policy work in financial inclusion. it can eventually help to popularize the notion of financial inclusivity, and in that way help garner more global support for financial inclusion initiatives the world over. finally, on behalf of bank negara malaysia, i would like to thank the participants who have come here from many countries and institutions to contribute their ideas and knowledge to this workshop. i also would like to thank the alliance for financial inclusion for their leadership and support in managing this initiative. i trust that the working group will be able to contribute towards the