was among the first movers and its financial stability report is now a decade old. the report recently underwent a revamp reflecting how rapidly this type of analysis has evolved in that time. many other central banks have since followed the bank of england ’ s lead, and in the hkma we have published our own monetary and financial stability report for several years now. more recently we began an internal banking stability report which aims to provide a macro prudential perspective on trends in the banking system that we can then use to target our on - site bank examinations more effectively. the eventual goal is to try to draw these two reports more closely together and to bring a more forward - looking perspective to our banking supervision work. when central banks make their financial stability analysis public it provides financial system participants with an insight into the central bank ’ s perception of the vulnerabilities of the system. it enables policymakers to be transparent in their views of where they perceive the risks and vulnerabilities to be. hopefully, by raising warning flags at a sufficiently early stage – for example if we perceive risks in a build up of credit to a particular sector – we can encourage banks to review the risks that they are running and, if necessary, to take action to mitigate those risks. but it is important to be careful how the risks and vulnerabilities are presented. the last thing we want to happen is for the predicted problems to surface because everyone has rushed for the exit at the same time. so the message has to be not one like " we think it ’ s too risky to extend more credit to this sector ” but instead more like “ have you thought about the entire range of relevant risks in extending more credit and are your underwriting criteria in line with the riskier environment? " it ’ s important in publishing a financial stability report to present its findings as a range of possible outcomes which the private sector can then be encouraged to factor into its own risk management practices. stress tests and scenario analysis provide the intellectual backbone for financial stability reports. stress testing, in particular, has come a long way in recent years. the hkma ’ s requirements on stress testing by banks have been in place for some time. our supervisory policy manual module on stress testing, issued in early 2003, requires banks to have in place a stress - testing programme and to integrate stress testing into their risk management processes. for our own internal purposes we also conduct stress tests by applying a range of shocks to the supervisory data that

muhammad bin ibrahim : sukuk as a viable fund - raising and investment instrument opening remarks by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the hkma - bnm joint conference on islamic finance, hong kong, 14 april 2014. * * * much has been talked about the global financial crisis that had brought about unparalleled financial miseries, economic calamities and social grievances. while the focus has been on financial reforms and economic remedies, the thought on the minds of governments and regulators is how to create a more sustainable global financial landscape. emphasis on ethics is key to this approach. greater involvement in ethical - related business has made its strides in contributing towards the overall strength of the global financial system. ethical investment itself has gained international recognition in recent years. estimated to be worth more than usd13 trillion, the ethical investment market now represents over a fifth of total assets managed globally. pension funds, sovereign wealth funds and institutional investors are leading the way. europe, the united states of america and canada make up 96 % of the share of this market. in asia, the market is still relatively small – at less than usd100 billion. as ethical investment catches on in asia, so too has investment in sukuk. sharing a close affinity, they optimise financial returns while maintaining social good and upholding strong governance. it is my pleasure to be here today at this joint conference on islamic finance, organised by the hong kong monetary authority and bank negara malaysia. this inaugural conference is set to mark a significant step to enhance collaboration and deepen financial linkages in islamic finance between malaysia and hong kong. the theme “ sukuk as a viable fundraising and investment instrument ” is most apt, given that the ethical - based fixed income instrument has increasingly gained recognition by the global financial community as an attractive source of funding for real sectors and long - term development. adoption of best practices for sukuk issuance the growth of the global sukuk market has been very promising. it reached a stock value of usd268 billion at the end of 2013 and since 2000 has grown at a cumulative average rate of 50 % per annum. the creation of a sukuk market in hong kong is a timely initiative as it has the potential to further spearhead its foray into islamic finance. sukuk, as a new asset class, is ideal for portfolio diversification and is increasingly well - accepted all over the world. from