, in particular, have benefited from the broad - based reforms and capacity building measures that had been undertaken following the asian financial crisis. notably, the consolidation of the banking sector, the strengthened board and senior management oversight functions within banks, and the more risk - sensitive capital and the stress - testing requirements have contributed towards reinforcing the core foundations for a more resilient banking system. banking institutions have also made significant advances in the adoption of improved risk management infrastructure and practices. today, the payoffs from these efforts are evident. the banking sector has maintained a steady growth momentum since the asian financial crisis, with profitability of the malaysian banking system growing by 36. 7 % to record rm17. 7 billion in 2007. the exposure of the malaysian banking sector to the sub - prime market has been minimal amounting to only 0. 3 % of the capital base of the banking sector. the malaysian banking institutions are thus now on a stronger foundation to venture into new businesses, undertake more complex risks and withstand shocks. their enhanced capabilities are backed by stronger balance sheets, with the risk - weighted capital ratio of the banking sector at 13. 2 % and net non - performing loans ratio of 3. 0 %. on the regulatory front, bank negara malaysia continues to direct significant effort and resources towards strengthening our surveillance capabilities to detect, monitor and to deal pre - emptively with emerging risks and vulnerabilities in the financial system. these efforts have also been reinforced by improvements in the surveillance tools and processes to enable pre - emptive action to be taken to avoid disruptions to the financial system. the supervisory processes have also been enhanced with more granular and holistic risk assessments of the financial institutions. in terms of the regulatory framework, the bank will be outlining the approach for the implementation of pillar 2 of the basel ii framework. the bank is providing further guidance in the areas of liquidity and operational risk management, the maintenance of internal capital targets, market disclosures, and the valuation processes and controls – particularly for illiquid instruments. the guidance will also be issued to address the implementation of the internal capital adequacy assessment process within the institutions to complement the minimum regulatory standards under pillar 1 and will also stipulate the minimum requirements for banks that are adopting the internal ratings - based approach. details of the proposed capital framework for securitization will also be released during the year. in addition, the liquidity guidelines will be revised to strengthen the requirements in the management

* markets can be defined by the instruments that are traded on them : oil, gold, foreign exchange, interest rates. but they are also defined by the people who use them. a marketplace brings together people who, by virtue of trading with each other, share common interests. it forms a community. and as for all communities, the protection of each of its members against potential abuse by others requires appropriate governance. this raises a particular issue for those markets that extend across national borders. it is that issue which forms the topic of my remarks. bis central bankers ’ speeches 1. the benefits of cross - border markets cross - border markets are a fact of contemporary life. there have of course been periods of high integration of global trade and finance in the past – the decades immediately preceding world war i were a particularly stark example. but markets have never been more integrated than they are today. trade integration is ever more facilitated by technological progress, making the transportation of goods easier and faster ; and by the fact that, in a digital age, a rising share of services in global output makes the distance on the ground between producers and consumers less of an obstacle to transactions. that is why global integration of trade 1 has risen sharply from 39 % of gdp in 2000 to 48 % in 2014. for the euro area, trade openness has increased from 58 % to 66 % of gdp over the same period. the same applies to finance, too – and perhaps all the more so. capital can be shipped across vast distances at virtually no cost. and there are good reasons why we should want in principle to facilitate cross - border investments. financial markets intermediate between the needs of savers and borrowers ; they open up a range of opportunities to both, thereby supporting innovation ; and they allow risks to be shared among those more willing or better equipped to bear them. all of this applies across borders as well as within borders. let me give you an example. countries, just like individuals, have different needs for capital at different stages of their demographic lifecycle. those with young demographics exhibit demand for capital from overseas, while countries with more mature populations have excess savings as they accumulate assets for retirement. in the case of europe, our demographics would justify a moderate current account surplus and capital account deficit. put differently, we benefit from open markets because we need to be able to invest abroad part of the savings that will finance our pensions. 2 for all these reasons, the belief that open markets are conducive to freeing human