society. in some countries, fundamental structural changes are being pursued to reduce the complexity of banking and to protect banking services from such higher risk - taking activities. the challenge however, is how this might be achieved in a sustainable manner without undermining growth and development, and erasing the important efficiencies in financial management. a model to reanchor finance to the real economy while the global financial stability efforts have made progress in generating an enabling environment for a new equilibrium of financial stability, a key consideration as we move forward is the need to redefine the fundamental character of modern finance and how it would interface and interact with the economy and the broader society. new considerations that prioritise justice and fairness, sustainability and inclusion have also become essential underpinnings of such a financial ecosystem. the recalibration of finance should aim to serve the needs of the real economy and more importantly the broader society. this would generate positive externalities that would in the medium term lead to more sustainable financial systems, and in turn contribute positively to growth and development. a core underpinning of islamic finance is the tenet that requires islamic financial transactions to be supported by genuine productive economic activity. islamic finance is also a financial regime that places emphasis on risk - sharing, thereby strengthening further the link of finance to the real economy. thus, it provides a greater understanding on the fundamental relationship between the financial sector and the real economy. the concept of risk - sharing in finance is not new. while risk - transfer activities currently dominate the conventional financial systems, risk - sharing in the form of equity has long been a cornerstone of capital markets with vibrant stock exchanges. techniques used by venture capital financiers also have similarities to risk - sharing contracts in islamic finance. the development towards a more equity - based financial system where risk - sharing takes place reduces the over - reliance on debt funding, thus avoiding excessive debt and speculation and thus financial system fragility. in islamic finance, this is further reinforced by shariah principles that strongly discourage excessive debt given its detrimental effects on society. the use of risk - sharing transactions and undertakings under participatory finance models in islamic finance thus offers the potential to reinforce the links between finance and the real economy. the contractual arrangements between the financier and the entrepreneur place bis central bankers ’ speeches strong emphasis on the value creation and economic viability of the enterprise. this results in a close link between the growth of the financial sector and real sector

zeti akhtar aziz : policy and regulation of financial inclusion welcoming remarks by dr zeti akhtar aziz, governor of the central bank of malaysia, at the unag asia regional forum on policy and regulation of financial inclusion, kuala lumpur, 6 may 2009. * * * introduction it is my pleasure to welcome you to the united nations advisers group asia regional forum on policy and regulation of financial inclusion. this conference takes place at a time when the world is confronted with addressing many issues that have emerged from the current global financial and economic crisis. whilst significant attention and efforts are being channelled to resolving the financial crisis and creating an enabling environment for the resumption of growth and job creation, we must not lose sight of the financial inclusion agenda. financial inclusion is vital for creating balanced sustainable economic growth. it provides the opportunity for all members of society to benefit from economic progress. it allows for a shared prosperity, an aspiration that is encapsulated in the united nations millennium development goals. the central bank of malaysia is most honoured to be given the opportunity to host this forum which is being held in asia for the first time. we are most honoured to have governor nout wellink, president, of the central bank of netherlands. we are also pleased to have present mr. jacques toureille, unag advisor, who will be delivering the keynote address by her royal highness princess maxima on her behalf. this forum brings together some of the best minds from different parts of the world with diverse experiences in the field of financial inclusion. i am certain that this forum will enhance our understanding of the vital issues confronting the financial inclusion agenda, and will contribute towards the formulation of new ideas in addressing the important issue of regulation and policy that will ensure the sustainability of an inclusive financial system. the financial crisis and its implications on the poor the year 2009 will likely to be a difficult year for most countries. as we enter the third year of this financial crisis, there is already a synchronised recession in the advanced economies. for most of the emerging economies however, the full effects of the crisis on their domestic economies will be felt this year. it is important to note that the financial systems in most emerging economies continue to remain sound and more importantly continue to function, providing credit and supporting the economy. the collapse of external demand has however, adversely affected the more open emerging economies. the issue of equal concern however, is the more disproportionate impact these developments will