muhammad bin ibrahim : scaling up excellence – creating opportunities while mitigating risks keynote address by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the regional conference on money services business “ scaling up excellence – creating opportunities while mitigating risks ”, kuala lumpur, 19 may 2014. * * * i ’ m glad to be here with you today to join mr mathew a. verghis in welcoming you to this regional conference on money services business. on behalf of bank negara malaysia, i would like to thank the world bank, the malaysian association of money services business, and the international association of money transfer networks who partnered with us in organising this event. this conference aims to bring together regulators and industry players to review developments in the money services business industry at a time when there are significant changes occurring in the financial industry. in many countries, money services business plays an important role in complementing banking institutions to provide financial services to the community, in particular, the unbanked and small business communities. given the forces of change that are reshaping the financial industry, it is timely to consider how these forces impacted the expectations, opportunities and challenges for money services businesses. the money services business industry contribute to an important purpose in our communities. they provide financial services to segments of society in both the developing and developed world that do not have access to basic banking facilities and services. increasingly, money services business provides and support tourism, business travel and cross - border trade activities in a more globalised world economy. according to a world bank report, it is estimated that nearly 1 out of 7 persons is a migrant, reflecting the large and diverse diaspora community in the world today. worker remittances to developing countries were in excess of usd400 billion last year and represent a key source of external resource flows. these flows support economic growth in developing countries, far exceeding official development assistance. more than usd 1 trillion was spent on global business travel expenditure in 2013 and more than 1 billion in international tourist arrivals are recorded each year. in 2013, business activities supported world trade volume of over usd 23 trillion. all of these developments have created new and greater demand for remittance, currency exchange and other financial services that can be offered by money services businesses. the industry itself has also become more diverse. advancements in technology have enabled new business models, offering new product and service, innovations and forming of new alliances. these enhancements have the potential to further lower cost and increase convenience

could have an impact on earnings and resilience in the medium term. one ssm project i could mention here explores the structural reasons for a disproportionately large risk appetite, which some institutions were shown to have in the past. this certainly does not mean that we are looking to intervene in an institution ’ s business activities ; instead, it is our aim to identify at an early stage and mitigate to the greatest extent possible any developments that could pose a serious threat to a bank ’ s livelihood. imbalances in the banking sector, then, are an important testing ground for european banking supervisors – yet everyday supervisory measures are equally as important, even if their success cannot always be put into numbers as easily. you can see this, for example, in the case of home country bias, a phenomenon which occurs when national supervisors unintentionally allow their national interests to influence their work. and it is precisely this trend that the ssm is designed to counter. it is not so much a case of supervisors breaking the rules, but more a question of how they interpret them, yet it is not always possible to identify a home country bias in each individual case. the new supervisory architecture is designed to counter this home country bias trend that national supervisors exhibit. supervisory teams consisting of staff members from several different countries and, of course, 3 / 6 bis central bankers'speeches the key role of the ecb have forged a more neutral approach and a more level supervisory playing field. i consider this a very welcome development. dear students, i hope that my remarks, which touched on only a small part of the work of banking supervisors in the new european era, have also managed to drum up some interest in our field of work. the tasks of national and european banking supervisors not only entail a high level of responsibility, but are also very varied and challenging. i do have my own particular reasons for saying this, however, not least as it is the specialists from the individual member states who keep the european supervisory mechanism up and running. germany and, in particular, the bundesbank contribute over 28 % of the total headcount of supervisors in the ssm. we therefore rate well qualified young professionals like yourselves very highly. 3. resolution – what we have learned so far let us now take a look at the topic of resolution in the narrower sense. we all have unpleasant memories of institutions which unfortunately only appeared to obey the laws of a market economy and our regulatory framework when