recently been a drag on the recovery of the european economy as banks´ ability to lend has been weak in many eu countries in the aftermath of the crises. it is now obvious that many of the developments in the european banking since the 1990 ’ s sew the seeds of the banking and sovereign debt crisis : – too - big - to - fail and too - big - to - save problems became more severe ; – banks misallocated too much funds in asset markets fostering unsustainable bubbles ; – weakly capitalised banks´ resilience to shocks became poorer ; – increased concentration of the banking system made banks more interdependent and vulnerable to contagion. some recent research suggests that a banking sector beyond size may also be harmful to a long - term economic growth. there are several potential reasons for that : – an overexpansion of banking may lead to a misallocation of financial capital towards housing loans and away from corporate lending. – the overexpansion may also lead to a misallocation of human capital as an excessive share of talented individuals is employed in the financial industry rather than elsewhere in the economy. financial sector needs talent individuals, so do the other sectors. – larger banking systems tend to experience more severe financial crisis. what the european financial system should look like? given the developments in the european banking and financial markets over past 20 years and given the legacy of the crisis, the policymakers face both short and longer - term challenges in financial market policies. in the short - term, we must find ways to boost bank lending especially to smes to invigorate economic growth in europe. the most recent results of the ecb´s quarterly euro area bank lending survey are encouraging in that respect : for the first time in seven years, euro area bis central bankers ’ speeches banks reported a net easing in credit standards in loans to enterprises in the second quarter of 2014. despite that, banks´ credit supply is clearly insufficient in many european countries. another short - term concern is the sorry state of the european securitisation markets : public issuances in the european abs markets remain low, trading is thin in some market segments and the whole market carries a stigma in spite of the fact that most european structured finance products performed well throughout the crisis. in the short - term, we need to stimulate abs markets to stimulate credit creation. in the longer - term the revitalisation of abs markets would, among things, ( i ) allow better

adnan zaylani mohamad zahid : keynote address - islamic finance and international action research conference keynote address by mr adnan zaylani mohamad zahid, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the islamic finance and international action research conference, kuala lumpur, 27 october 2023. * * * assalamu'alaikum w. b. t and good morning. it is a great honour to be here today. this is such an impressive gathering of minds, academics, researchers and practitioners across economics, finance, and business disciplines. it's not often that bank negara malaysia is invited to such a prestigious gathering. i would like to thank the organisers for giving us this opportunity to share our perspectives today. given the uniqueness of this gathering, this also presents us with a great opportunity to share what i think are important questions, challenges and issues for us and the islamic finance community as a whole to consider on how islamic finance would advance further. as a saying of prophet muhammad s. a. w.,'the best of people are those that bring the most benefit to the rest of mankind '. the theme of today's conference,'empowering change, elevating impacts ', signals a commitment to make a difference and bring that benefit. this, indeed, has always resonated with the evolution of islamic finance in malaysia. guided initially by the objective of financial inclusion for muslims during the early years of its establishment, the islamic finance industry has expanded beyond serving the muslim community to achieve scale, a wide range of solutions and address evolving finance needs. today, malaysia is recognised as one of the leading islamic financial markets globally. our islamic capital market commands close to 65 % share of the total capital market and has continued to grow alongside islamic banking, which now accounts for almost 45 % of the total financing in the banking system. takaful has also gained a stronger presence, holding almost a quarter ( 24 % ) of the market share of net contributions. our vision towards elevating the contribution and impact of islamic finance transcends borders and the marketplace. global islamic financial assets have tripled over the last decade to reach usd4 trillion and are expected to reach usd6 trillion by 20261. within the region, asia is home to nearly a quarter ( 23 % ) of the world's islamic finance assets. malaysia has immense potential as an international gateway for islamic finance, building upon