, and thus preserving the financial stability of the institution. the third point is that the growth of islamic banking and finance offers substantial new opportunities with respect to designing otc derivatives compliant with the syariah principles and appropriate for commercial use. as bankers and legal practitioners involved in the otc derivatives industry, i believe these points will be of relevance to you in providing quality services to your clients and in developing your organisation ’ s otc business portfolio. there are significant opportunities emerging in the asian region. regional integration has become more pronounced in recent years with the more rapid expansion of intra - regional trade in asia. intraregional exports account for about one third of total exports of the region. intra - regional trade with the asean nations accounts for about 24 % of the region ’ s total trade, exceeding asean ’ s trade with the united states. trade with china, india and korea has increased significantly. notably, since 1993, china ’ s role in the region has reversed from that of a net exporter to a net importer. east asian exports to china have doubled during the past decade. there has also been a trend towards greater intraasian investment flows in the region. this includes higher investment of surplus funds into the region, in the form of foreign direct investments as well as portfolio capital flows. these regional developments will lead to greater demand for otc financial derivatives, which can be met by any of the major national, regional or global financial institutions operating in these markets. malaysian banking institutions must be prepared to compete in this highly innovative and agile global industry by staying ahead on the learning curve for writing otc derivatives that precisely match the risk management characteristics needed for effective hedging. at the same time, banking institutions must take into account the need for robust internal controls specifically in the area of credit, market, operational and legal risks to prevent the failure of any derivative contract. my second point concerns the new basle ii capital accord. the international swap dealers association, as the global trade association representing the leading participants of the otc derivatives industry, has provided its views to ensure that the capital requirements of the new capital accord ’ s will reflect the actual amount of risk that a bank is exposed to in a particular derivatives transaction. according to the recommendations put forth by the basle committee, capital requirements to support off - balance sheet derivatives are calculated by reference to the credit risk of the item adjusted for credit quality of the counter party. the approach essentially “ marks to market ” to determine the current replacement cost

muhammad bin ibrahim : rethinking microfinance norms special address by mr muhammad bin ibrahim, governor of the central bank of malaysia ( bank negara malaysia ), at the global symposium on microfinance, kuala lumpur, 22 may 2017. * * * thank you for the opportunity to speak today at this symposium. bank negara malaysia is pleased to host this event together with the world bank. we are also pleased to have finance minister ii, yang berhormat datuk seri johari abdul ghani present with us to address the audience here today. it has been almost six decades since the economist john kenneth galbraith observed that few things are more evident in modern social history than the declining interest in inequality as an economic issue. today, financial and economic inclusion is given priority as a policy agenda, as the global economy confronts an environment of rising income inequality and tepid global growth. according to the world bank, the distribution of income globally is highly unequal today with a gini coefficient of 70. 7, up from 68. 4 in the 1980s. in some countries, income inequality has in fact risen sharply. the challenge of income inequality is even more prominent in asia. a working paper published by the imf in 2016, highlighted that in asia, the average gini coefficient has risen by 4 points from 36 in 1990 to 40 in 2013. over the same period, the average gini coefficient for the rest of the world rose by only 2 points. this is against the backdrop that asia experienced an average gdp growth rate of 9. 6 percent. this suggests that trickle - down economics has failed to deliver equitable growth. we should expect that if significant segments of the population are systematically excluded from the tools that drive success, there will be economic consequences. financial access and education are arguably two of the most critical tools that enable individuals to achieve success. yet, around 50 % of the global population live on less than usd2. 50 per day, most of them without access to formal financial services. that is almost one in two people who, given the opportunities that come with financial access, could be making much greater contributions to society, and consequently, raising economic potential. we also learnt that, stagnating median wages have discouraged the low and middleincome from saving and investing. against this backdrop, microfinance has captured the global imagination of policymakers, development institutions, private enterprises and donors alike to promote greater financial inclusion. yet over the last