Zeti Akhtar Aziz: 10th year anniversary of the establishment of the Islamic Financial Services Board Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Islamic Financial Services Board (IFSB) 10th Anniversary Dinner, Kuala Lumpur, 16 May 2013. *  *  *  It is my great pleasure to welcome Your Excellencies and distinguished guests to this IFSB 10th Anniversary Dinner, organised in conjunction with the 10th IFSB Summit. Tonight is a landmark celebration of the 10th year anniversary of the establishment of the Islamic Financial Services Board (IFSB), as we commemorate a decade of milestones and achievements of the IFSB and pay tribute to its members and industry stakeholders that have provided undivided support to the Board. Bank Negara Malaysia is indeed honoured to have the opportunity to host this 10th IFSB Summit, which is exactly ten years since we hosted the IFSB inauguration in November 2002. We are also very pleased to welcome back the Founding Members and many of the industry leaders that witnessed the inauguration of the IFSB. We are very honoured to have your presence at this Anniversary Dinner. It was in the year 2000 that the discussion began on the merits of establishing a dedicated organisation to develop a separate and distinct regulatory framework for the global Islamic finance industry.
The Small Ponds are the relatively modest financial markets of capital-importing emerging countries. Past experience suggests that as big fish enter the small pond, this can cause ripples right across the international monetary system, never more so than in today’s financially interconnected world. This paper considers the BFSP problem. It plots the evolution of the international financial network over the past quarter-century. And, within that, it assesses recent shifts in portfolio  BIS central bankers’ speeches  1  choice by international investors which may have accentuated today’s BFSP problem (Section 2). More speculatively, it then considers potential future trends in portfolio choice and assesses their implications for tomorrow’s BFSP problem (Section 3). If recent trends are continued, the BFSP problem may become more acute over time. In the race between capital market deepening in emerging markets and capital diversification in advanced economies, the latter may gain the upper hand (or foot). The BFSP problem during 2010 may have been the thin end of a sizable wedge. That, in turn, may intensify the debate on appropriate policy responses, such as the pace of capital liberalisation and the case for capital restrictions (Section 4). 2. Today’s BFSP problem  A useful panorama on financial globalisation is provided by mapping the evolution of the global financial network over time. The topology of this network provides a simple, graphical visualisation of liberalisation patterns.