in the real neutral rate means that any given setting of our policy rate will be less stimulative today than it was a decade or two ago. the current policy rate, while certainly providing monetary stimulus, is not as stimulative as it would have been before the crisis. by the same token, an immediate rise in our policy rate back to, for example, the 4. 25 per cent that prevailed before the financial crisis would represent an extreme tightening of policy and would have significant consequences. this is just another way of saying that low interest rates are actually having big effects today, but the headwinds pushing back on that stimulus remain quite powerful. for some savers, ultra - low interest rates do have positive effects. in particular, the value of most assets rises when interest rates decline, supporting gains in household wealth. this effect may not be as obvious as the impact of low rates on savings. but lower interest rates generally mean higher stock and bond prices, as well as increases in the value of real estate, which has been another important source of wealth for many savers, particularly seniors. i realize this may be cold comfort to those people who have to adjust retirement plans to a lower - for - longer world. but the difficult reality is that savers must adjust their plans. that may mean some combination of putting aside more funds, working a little longer than planned or changing the mix of investments. there are no easy answers, particularly for some who have already retired. compounding the challenge is the fact that people are now living longer – life expectancy has risen by about 6 years since the early 1980s. i hope you will agree that this is unambiguously good news. but combining longer life expectancy with low interest rates means that a person starting to save today would have to set aside much more to generate the same retirement income as a person who began saving 25 years ago, if both wished to retire at the same age. lower for longer and companies the other group i would like to talk about today is companies and, specifically, their decisions about business investment. across the global economy, investment spending fell sharply during the financial crisis, and the recovery has been unexpectedly weak. the recent drop in oil and other commodity prices has lowered investment plans even further. when investment slows, it means an economy ’ s potential output also grows more slowly, which can reinforce the trend toward lower interest rates. in contrast, raising potential output through increased investment can ease the downward pressure

“ return - to - basics ” investor demand. following the global financial crisis, investors have become more averse to the unknown risks embedded in complex financial instruments. islamic finance, with its stronger emphasis on transparency, price certainty and risk - sharing, can benefit from this renewed demand for more basic investments, from muslim and non - muslim investors alike. integrating islamic finance with global finance the third, and perhaps most important, challenge that islamic finance must overcome is its present fragmented state. islamic finance currently suffers from low economies of scale. the overall size of islamic assets is still less than 1 % of the global financial system. being smaller and relatively young, islamic finance currently offers fewer product choices for consumers and less comprehensive risk management options for institutions. cross - border investment flows are also constrained by differing interpretations of permissible transactions under bis central bankers ’ speeches shariah principles. the isolated pools of islamic liquidity in each market restrict opportunities for more efficient allocation of capital across consumers, industries, and jurisdictions. islamic finance must become more integrated with the global financial system. the industry must expand beyond its traditional markets to include a wider range of financial institutions, investors and consumers. this means islamic finance must strike roots in the key international financial centres of the world. these centres can contribute to islamic finance in several ways. first, market liquidity. the broad and deep investor pools in international financial centres offer an opportunity to channel non - traditional sources of funds into islamic finance. in singapore, for instance, several local and foreign issuers have successfully tapped the capital markets using islamic instruments. the demand comes from not just singapore but a diverse group of international investors across asia and europe. many of them are conventional investors, attracted by the credit quality and yields. second, capabilities in global financial markets. islamic finance should leverage on the capabilities and strengths offered by conventional financial markets in international centres, to augment the range of shariah - compliant products. take for example the market for real estate investment trusts, or reits. singapore has grown over the past decade to become the largest reit market in asia outside of japan. building on this strength, players in singapore have established the world ’ s largest shariah - compliant reit, which draws in conventional and islamic investors around the world. third, opportunities for interaction and collaboration. as islamic finance gains prominence, conventional financial institutions increasingly want to be involved to tap these opportunities. financial centres like singapore serve as intersecting nodes where islamic financial institutions collaborate with their conventional partners to