in asia. we are seeing financial institutions leveraging on the strengths and expertise that have been developed in both islamic and conventional financial markets. this is expanding the range of shariah - compliant products and allowing the islamic finance industry to tap on broad and deep investor pools globally and in asia. • malaysia is widely recognised as a leader in islamic finance, in particular for the issuance of sukuks. • islamic finance is also seeing growing interest in other asian financial centres such as singapore, hong kong and tokyo. • just recently in mid - november 2012, institutional and private investors in singapore and hk were the largest investors in the us $ 15. 5 billion global sukuk issued by the abu dhabi islamic bank ( adib ). aaoifi is accounting & auditing organisation for islamic financial institutions international organisation of securities commissions international association of insurance supervisors bis central bankers ’ speeches • between our two countries, we are seeing malaysian banks collaborating with singapore corporates and financial players to structure s $ denominated corporate sukuk programmes. and singapore - listed companies are venturing out to tap the ringgit sukuk market in malaysia. these are trends that we are keen to encourage. to repeat therefore, i am optimistic that we can realise the significant growth potential for islamic finance in the next 10 – 15 years. managing the challenge of capital flows in the post - crisis era let me move on now to say a few things about the challenges that many in the emerging world face in managing capital flows, particularly in the face of the extremely low interest rates being set in the advanced economies ( aes ). we are in an unprecedented situation. interest rates are expected to stay extremely low in the us and much of the advanced world for a few years, reflecting decisions by their central banks to keep monetary conditions highly accommodative until their economies resume normal growth. there is debate among economists on how effective these activist monetary policies, such as the us fed ’ s qe3 strategy, will be in reviving entrepreneurial spirits and private investments. if the strategy succeeds and the us economy recovers, it will be a plus for asia as well. in the meantime, however, there are significant implications for emerging market economies, as global investors search for better returns – better than the near - zero rates they get on cash and treasury bills. with large amounts of liquidity now moving between markets, short - term shifts in investor sentiment leads to volatility in capital flows. we have

developments in the economy and their implications, and mapping out necessary policy actions. thus, a central bank needs to put emphasis on the institutional culture of constant learning. 12 the third aspect is the integration of wide - ranging areas of knowledge. taking an example of monetary policy, a central bank generally relies heavily on the macroeconomic theory in conducting monetary policy. the economic theory plays an important role in providing a framework for understanding a complex world. at the same time, we should be careful that sticking to one specific theory potentially distorts our views. historical knowledge is also useful. looking back at the history of financial crises, we are stunned by the common mentality of “ this time is different. ” 13 in addition, knowledge on banking operations, just i mentioned, is also indispensable. a central bank needs to make constant efforts to produce synergy effects between monetary policy and prudential policy wings by overcoming some differences in the cultures of the two policy wings. the fourth aspect is cooperation among central banks. we expect that economic activity and financial market transactions will continue to grow across borders, but we do not imagine that sovereign nations will disappear in the foreseeable future. in that case, cooperation between central banks will become increasingly important in achieving financial system stability. under the current global financial crisis, central banks have communicated with each other intensively at various levels, from top central bankers to mid - class staffers, which surely becomes considerable wealth for the future of the central bank community. vi. closing remarks central bank conferences reflect the institutional culture of central banks, and this conference entails such aspects more clearly with its title of “ future of central banking. ” i am see king ( 2005 ) for the importance of learning for central banks. see reinhart and rogoff ( 2009 ). convinced that the one - and - a - half - day conference will give us profound insights into the future of central banks and central banking. thank you very much. references blanchard, olivier, giovanni dell ’ ariccia, and paolo mauro, “ rethinking macroeconomic policy, ” imf staff position note, 2010. blinder, alan s., the quiet revolution : central banking goes modern, yale university press, 2004. cagliarini, adam, christopher kent, and glenn stevens, “ fifty years of monetary policy : what have we learned?, ” paper presented at the 50th anniversary symposium of the reserve bank of australia, february 2010. caruana,