to support investments in order to secure sustainable growth. in the long - run, the resilience and robustness of the macro - economy in conjunction with the depth, breadth and orderliness of the financial markets will determine the stability of the external sector as well as the overall financial sector. 12. now i would like to turn to some of the major issues and concerns relating to the forex market, which are currently engaging the attention of the policy makers and, i hope, also of the market players. hedging of currency exposures by corporates 13. in the recent period, the global financial markets have been going through a phase of low volatility and the indian markets have been no exception to this trend. a supportive policy environment backed by accommodative monetary policy stance of the central banks of the advanced economies ( aes ) and visible signs of pick - up in growth in some of the aes have contributed, in a large measure, to reduction in volatility. on the flip side in india, there is emerging anecdotal evidence of reduced propensity to hedge foreign exchange exposures arising out of a sense of complacency. the unhedged exposures in respect of external commercial borrowings ( ecbs ) / foreign currency convertible bonds ( fccbs ) lead to large scale currency mismatches in view of the bulk amount borrowed by domestic corporates for longer tenors with limited or no natural hedges. further, the increasing use of bond route for overseas borrowings exposes the domestic borrowers to greater roll - over risk. as per indicative data available with the bank, the hedge ratio for ecbs / fccbs declined sharply from about 34 per cent in fy 2013 - 14 to 24 per cent during april - august, 2014 with very low ratio of about 15 per cent in july - august 2014. large scale currency mismatches could pose serious threat to the financial stability in case exchange rate encounters sudden depreciation pressure. it is absolutely essential that corporates should continue to be guided by sound hedging policies and the financing banks factor the risk of unhedged exposures in their credit assessment framework. banks have expressed the difficulty faced by them in pricing the unhedged exposures of the corporates in an environment of low pick up in credit growth. given the implications of large unhedged forex exposures on the financial stability, it is necessary for the banking industry to act in unison to bring about

mentioned in my speech at the previous wibc, many risks – including credit, market, liquidity, operational and reputational risks are common to both conventional and islamic finance. overly - optimistic projections of growth, or overconcentration in particular sectors, or mismatches in assets and liabilities can give rise to risks that can damage financial institutions. the crisis serves as a valuable pause from the frenzy of financial activities. this allows us to re - evaluate risk management practices in individual financial institutions, as well as the systemic linkages across institutions, instruments and markets. 13. central banks and regulators need to cooperate closely so that risk assessments can be shared and common action taken where necessary. the central bank of bahrain ( cbb ) and mas have enjoyed very good relations, and have worked to promote islamic finance. the cbb is a highly - regarded central bank and integrated financial regulator. i am pleased that the mas and cbb will be signing a memorandum of understanding later today to build on our existing strong relationship to enhance supervisory cooperation and information - sharing. 14. the third area relates to close interactions among industry practitioners and the development of ground knowledge. while there are many opportunities for trade and investment among emerging economies, the business linkages are only beginning to grow. forums such as the wibc provide a valuable platform for practitioners to build their knowledge of each region and the business leaders. at the same time, for large - scale and long - term investments such as in infrastructure, effective knowledge of partners and on - theground presence are important ways of mitigating risks. recent developments in singapore 15. let me therefore take this opportunity to say a few words about developments in singapore. as an international financial centre in asia, singapore seeks to develop islamic finance by leveraging on our existing strengths in banking, insurance, asset management 163 / 2009 and capital markets. although relatively new, we have seen steady progress. mas launched its sukuk early this year. the islamic development bank also issued a $ 200m singapore dollar - denominated trust certificate. in may, olam international, a local trading firm tied up with the islamic bank of asia to launch a commodity murabaha based on agricultural trade flows. just last month, singapore ’ s keppel t & t and saudi arabia ’ s al rajhi holding group announced an agreement to establish a joint venture asset management company to manage the world ’ s first shariah - compliant data centre fund. other singapore companies and real estate