zeti akhtar aziz : launch of the investment account platform in malaysia keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia ( bank negara malaysia ), at the launch of the investment account platform ( iap ), sasana kijang, kuala lumpur, 17 february 2016. * * * it is my great pleasure to be here this morning for the launch of the investment account platform ( iap ), a centralised multi - bank platform that is likely to have significant implications on the role of financial intermediation in the islamic financial system. this platform is more than just a new and innovative medium for shariah - compliant investments and fund raising initiatives. it signifies a fundamental shift towards providing solutions that addresses the prevailing gap in the current risk - transfer financial regime to one that now allows for financial institutions to include a wider range of investment intermediation activities that emphasises risk - sharing and thus facilitate a stronger linkage of finance and the real economy. islamic finance in malaysia has journeyed through different phases of development and has now evolved into a complete islamic financial ecosystem that operates alongside the conventional financial system. underpinning its growth has been the infrastructure and institutional development, product development that is reinforced by increased competition, and supported by a robust shariah, legal and regulatory framework. its development has also been strongly anchored by the investment in human capital development. the industry has now not only achieved a market share beyond the target of 20 percent by the year 2010 as was envisioned in the financial sector masterplan, but it has also met the increasing and differentiated demands of the economy through the range of financial product offerings in islamic banking, takaful and islamic capital market segments. the initiatives taken to develop the islamic financial system has aimed to build a comprehensive financial sector that operates at the highest efficiency and with an outreach that would extend beyond domestic and regional markets and thus facilitate greater cross border economic linkages. in advancing to the next level of growth and development, the islamic financial services act 2013 ( ifsa ) now provides the industry with the foundation to transition into its next stage of development. the act takes into account the specificities of islamic finance while ensuring a robust governance of an end - to - end shariah compliant regulatory framework. it also provides an enabling environment for islamic banks to diversify their business through the offering of investment accounts as an alternative means of raising funds from the public. with this, islamic banks are allowed to pursue

the islamic interbank and foreign exchange markets are integral to the efficient functioning of the islamic banking system. they facilitate the liquidity operations of islamic banks and promote financial stability. in addition, they serve as an important transmission channel for the implementation of monetary policy as well as the central bank's role as lender of last resort. the creation of a well - developed islamic capital market is also important as it provides the users of capital with an alternative and cost - efficient source of longer - term financing, and accords investors with a wider range of financial instruments to suit their different risk profiles. and at the core of any financial system lies an efficient and robust payment system for the clearing and settlement of payments. other financial infrastructure that provides support to the development of the islamic banking sector includes the mortgage corporation to undertake the securitisation of house financing, a credit guarantee corporation to provide guarantee schemes to the sme industry, and a rating agency to rate the islamic financial instruments and a deposit insurance scheme to provide the necessary safety net for depositors should also be developed. in addition, the auditing, tax and legal firms must have the right talents to provide their services to the islamic financial institutions. these ancillary institutions must have the ability to provide their services that are in accordance with the shariah principles. tenth, consumer education and awareness about islamic banking is critical to its success and future development. a consumer education programme needs to be developed to enhance public awareness of the features of islamic banking products and services. translating the action plan into reality the appropriate islamic banking system for a country would be largely based on the national agenda of the respective countries, the objectives that the system hopes to achieve and the available resources. for the adoption of a dual banking system, the conventional banks have the option of offering islamic banking products on a window basis or via full - fledged islamic branches or an islamic subsidiary. conventional bank may also be converted to operate as an islamic bank. alternatively, the islamic banking system may only comprise islamic banks newly created to operate in parallel with the conventional banking system. in addition, the government can upgrade existing islamic savings institutions to islamic banks ; license foreign islamic banks as a consortium or on joint venture with local banks ; or a combination of these options to achieve its objective. alternatively, a country may wish to adopt a system - wide islamic banking and finance, a single banking system that fully accords the shariah framework. allow me to take the opportunity to present the malaysian experience. the