economy was the lifting of exchange controls. south africa had to face this daunting challenge in 1994 with the knowledge that the country had no foreign reserves at its disposal at that stage to finance any net outflow of capital. it had to rely, therefore, on inflows of capital to generate the foreign exchange reserves that would be needed for the financing of any outflows, following upon the removal of the controls. in the beginning, the south african monetary authorities were often criticised for not being more bold, and for following a policy of gradualism instead of a “ big bang ” approach for the removal of exchange controls. in retrospect, and taking account of the magnitude of the gross flows into and out of south africa over the past five years, the path followed by the authorities was undoubtedly the correct one. on balance, and on a gross basis, non - residents increased their claims on south african residents by more than r200 billion over the past five years. this enabled south africa to finance an accumulated current account deficit of about r40 billion, to increase the net foreign reserves by about r35 billion, and to allow private south african residents to accumulate about r130 billion in foreign assets. this included about r60 billion of foreign direct investment by south african corporates, about r65 billion held by institutional investors in foreign assets, and about r4 billion invested by private individuals outside of the country. the process of the gradual removal of exchange controls resulted in the effective withdrawal of about 70 per cent, [ or even more ], of the exchange controls that existed at the beginning of 1994. at this stage, south africa has no effective exchange controls any more on : • • current account transactions of the balance of payments ; or the inward or outward transfer of funds owned by non - residents. in the case of residents, limits were introduced for amounts that can now be invested outside of the country by corporates, institutional investors and private individuals. the further phasing - out of exchange controls requires the gradual raising of these ceilings until they are no longer restrictive. the only area in which no concessions of any significance were made so far refers to the blocked funds of emigrants or former residents of south africa. the government must still take a decision on the implementation of a programme for what will most probably be a gradual release of the blocked funds of former residents. the globalisation process the liberalisation of the south african financial sector and concurrent developments in the structure of and volumes in the

zeti akhtar aziz : islamic finance – new frontiers in financing the economy keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the eu - malaysia chambers of commerce and industry ’ s ( eumcci ) quarterly financial panel discussion 2012 “ islamic finance – new frontiers in financing the economy ”, kuala lumpur, 8 march 2012. * * * in this new phase of globalisation in which economies and financial systems are increasingly becoming more interconnected, we are seeing the emergence of several new trends in trade and investment flows. while there has been a slower expansion in world trade and investment flows in the aftermath of the global financial crisis, cross - border trade and investment activities among emerging economies have been increasing significantly. asia is very much part of this changing pattern in world trade and investment activity. in asia, strong domestic demand, supported by resilient financial systems and well developed financial markets have well intermediated these international flows. the most pressing challenge confronting the current global economy is to generate growth and employment. it is particularly important for the crisis - affected economies that growth resumes and is sustained, while addressing fiscal imbalances, public and private sector overindebtedness and the financial sector impairment, the solutions to which will most likely result in slower growth. while supportive domestic policies will thus be necessary to support the growth, also important is the potential growth that can be gained from trade and investment with other parts of the world. for the countries in the asean region, the partnership with the eu region has expanded steadily over time, and has continued to evolve and strengthen. there is significant potential to expand such trade and investment links between both the eu and asean regions. global corporations, including the eu and asean multinational corporations ( mncs ), have contributed to maximising the mutual benefits from such relationships. in malaysia there are currently more than a thousand multinational corporations from more than 30 countries. many are from the eu region. initiatives that continue to lower the barriers between our respective regions are also set to strengthen the growth of such strategic partnerships. it is my pleasure to be here at this quarterly financial panel discussion, organised by the eu - malaysia chamber of commerce and industry, to speak on the role that islamic finance might have on facilitating greater trade and investment between our regions. islamic finance, which was previously domestic - centric, is now increasingly providing financial solutions for cross - border trade and investment. progressive liberalisation has facilitated the internationalisation of islamic finance.