muhammad bin ibrahim : sukuk as a viable fund - raising and investment instrument opening remarks by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the hkma - bnm joint conference on islamic finance, hong kong, 14 april 2014. * * * much has been talked about the global financial crisis that had brought about unparalleled financial miseries, economic calamities and social grievances. while the focus has been on financial reforms and economic remedies, the thought on the minds of governments and regulators is how to create a more sustainable global financial landscape. emphasis on ethics is key to this approach. greater involvement in ethical - related business has made its strides in contributing towards the overall strength of the global financial system. ethical investment itself has gained international recognition in recent years. estimated to be worth more than usd13 trillion, the ethical investment market now represents over a fifth of total assets managed globally. pension funds, sovereign wealth funds and institutional investors are leading the way. europe, the united states of america and canada make up 96 % of the share of this market. in asia, the market is still relatively small – at less than usd100 billion. as ethical investment catches on in asia, so too has investment in sukuk. sharing a close affinity, they optimise financial returns while maintaining social good and upholding strong governance. it is my pleasure to be here today at this joint conference on islamic finance, organised by the hong kong monetary authority and bank negara malaysia. this inaugural conference is set to mark a significant step to enhance collaboration and deepen financial linkages in islamic finance between malaysia and hong kong. the theme “ sukuk as a viable fundraising and investment instrument ” is most apt, given that the ethical - based fixed income instrument has increasingly gained recognition by the global financial community as an attractive source of funding for real sectors and long - term development. adoption of best practices for sukuk issuance the growth of the global sukuk market has been very promising. it reached a stock value of usd268 billion at the end of 2013 and since 2000 has grown at a cumulative average rate of 50 % per annum. the creation of a sukuk market in hong kong is a timely initiative as it has the potential to further spearhead its foray into islamic finance. sukuk, as a new asset class, is ideal for portfolio diversification and is increasingly well - accepted all over the world. from

about one thing – we cannot achieve financial stability through regulation alone. government regulation sets a framework for the market, but all market participants have to behave responsibility within those confines. to paraphrase the roman philosopher seneca, decency may forbid what the law does not – and we cannot stress this principle often enough. at the moment, there is reason to doubt whether all of our citizens truly believe that banks are capable of the kind of decency we need to see. the many unforgivable market manipulation scandals of recent years have further undermined public trust in the willingness of banks to behave responsibly. and that is a dire situation to be in, as bank business is largely based on trust. to lose that is to risk losing everything. so this trust urgently needs to be restored. stricter regulation can help in this process, but the banks themselves must also do their part to remedy the situation. they have to show that they are prepared to make changes that go above and beyond what the law requires. they must show that they are capable of pushing through the necessary change of culture in the banking industry. it will be crucial for banks to behave in a manner which reflects what they really are : service providers for the real economy. financial transactions are not an end in themselves. if we can instil this idea in people ’ s minds, we ’ ll be able to take the final key step in our quest for greater stability. thank you very much. bis central bankers ’ speeches