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

##ra ) was established this year to conduct applied shariah research on the contemporary islamic finance issues. isra also provides a platform that promotes active engagement and dialogue among global shariah scholars that promote mutual respect in shariah and the convergence of views from different jurisdictions in the global islamic financial system. the third strategy is to promote greater financial integration with the global islamic financial system. the malaysian islamic financial system has also been progressively liberalised to allow for increased foreign entry and participation in our financial system, thus facilitating greater cross border flows and thus strengthening the international financial inter - linkages. this has taken the form of issuance of new licences and increasing foreign participation in both islamic banks and takaful companies to 49 %. new licences were also issued to foreign fund managers and foreign stockbrokers. in this new phase of development for islamic finance, malaysia as an international islamic financial hub, has increasingly become a meeting place for businesses from different parts of the world that need to raise funds and for investors that have surplus funds for investment. islamic finance going forward there is now a strong and growing demand for islamic financial products in the global market, far exceeding the current availability of financial products and services being provided by the islamic financial institutions. going forward, there is therefore tremendous upside potential for islamic finance. as the pace of development of the islamic financial services industry accelerates, the increasingly more complex and challenging environment will continue to shape the advancement of the industry. central to this will be the expansion of the business parameters and innovative product offerings. for this, there is increased investment in research and development to yield new instruments and structures to meet the changing requirements of the international community. an area of focus, in particular, is related to the development of mechanisms for risk mitigation and liquidity management. of importance, are the solutions needed to converge the market requirements and the shariah compliance. increased innovation also calls for greater emphasis on the implementation of best practices and higher standard of risk management. vital to this is the implementation of the prudential standards promulgated by the ifsb. there is also a need to leverage more on it applications and the strengthening of management capabilities of the islamic financial institutions. going forward, with the increased awareness and understanding of islamic finance, the role of market discipline will become increasingly important in driving islamic financial institutions towards ensuring shariah compliance in the operations, in improving operational efficiency and in instituting sound and dynamic risk management practices. the forces of innovation also