duvvuri subbarao : policy discipline and spillovers in an inter - connected global economy comments by dr duvvuri subbarao, governor of the reserve bank of india, at the highlevel conference on the international monetary system, zurich, 10 may 2011. * * * 1. the interconnected world is not new. we have been living in it for some time. for half a century, exports, international capital flows, and foreign direct investment have been growing much faster than gdp, binding economies ever more tightly together. in many ways, this process has been a tremendous force for good. my own country, india, is testament to that. integration with the world contributed to growth, lifting hundreds of millions of people out of poverty. but in the past few years, we have seen that these linkages can also have tremendous costs : developments in other countries, over which we have no control, can without warning plunge countries into difficulty or even crisis. 2. so, we need to find ways to maximize the benefits of globalization while minimizing its costs. to do this, there are two basic imperatives. first, we need to better understand the ways in which we are linked together. and then, we need to translate this understanding into coordinated policy action. that is, we need to consider ways in which countries can impose policy discipline on one another ’ s behaviour, to minimize the risks that their policies could pose for others. i would like to focus my brief remarks today on these two tasks : understanding the nature of linkages and doing something about them. understanding linkages 3. we cannot begin to impose policy discipline on countries until we improve our understanding of the linkages amongst economies. recent experience shows that our understanding of the nature of these linkages is seriously deficient. in fact, standard econometric models still suggest that shocks in one country have very small effects on other countries. they do that because they assume that trade is the primary channel for transmitting these shocks across countries, and trade moves in line with gdp. both these assumption are flawed. as we all know, the 2008 crisis originated in the housing sector which is a quintessentially non - traded good. 4. in addition, we saw during the crisis that the financial channel is tremendously important, in ways that are still poorly understood. for example, after lehman collapsed, interbank rates in india soared, by much more than in many other emerging markets, even though india ’

luis m linde : islamic finance – growing importance and regulatory challenge welcoming remarks by mr luis m linde, governor of the bank of spain, at the european forum on islamic finance, organized by the islamic financial services board ( madrid ), madrid, 24 may 2016. * * * mr. jaseem ahmed, secretary - general of the islamic financial services board ( ifsb ) ; mr. guillermo de la dehesa, chairman of the international advisory board of ie business school ; colleagues, ladies and gentlemen : it is a pleasure for me to welcome you all to the european forum on islamic finance. this is the fifth european forum since 2005, after the previous fora in luxembourg, germany, france and italy. following the tradition established by other european central banks, we are glad to support this event, organised by the ifsb. i would also like to thank the ie business school for their hospitality in hosting the forum in madrid today. the purpose of this european forum is to gain a better grasp of the specifics of islamic finance and its development, which has been particularly noticeable in the last decade. in this respect, i would like to stress two relevant aspects of islamic finance in my opening remarks : first, its growing importance in international finance ; and second, the ongoing regulatory efforts to facilitate its insertion in international markets. the growing importance of islamic finance indeed, islamic finance has grown most significantly in the last decade, posting double - digit rates since 2007, at close to 20 %, compared with growth of 4 % in the “ conventional ” financial sector. it has now reached a volume of us $ 2 trillion, which is a very significant figure that represents around 1 % of total global bank assets. the surge of islamic finance is apparent both in islamic countries and also, in european markets, with the establishment of islamic banks and the development of the sukuk market for private and official issuers under some european jurisdictions. the prospects for islamic finance are also positive, given the extensive scope for the financial inclusion of a population in a number of countries, with very low rates of bank access and usage. the regulatory challenge of islamic finance the further development of islamic finance will nonetheless depend on implementing the necessary financial reforms to ensure its integration into the wider financial system. here, i think that the challenges are twofold : first, in islamic jurisdictions the challenge is to continue developing the architecture of islamic finance in areas such as payment systems and supervisory and resolution regimes. in particular, it would seem vital to