For Swedish banks and financial institutions, the difference as regards participation in central bank monetary policy operations will probably not be all that great. The Riksbank will no doubt continue to be the financial sector’s counterparty. The main differences from today for Swedish banks are that the overnight market will be considerably larger and that minimum reserves are likely to be required. How monetary policy is to be constructed and implemented in detail has still to be decided. These matters will not be finalised until the ECB has been established next year. Thus it is the countries which participate from the start that will be in a position to influence the conduct of policy as well as the organisation of the work in the new European bank. There are already tendencies for countries belonging to the “presumed” core to exercise a greater influence over the process. 2. Payment system A single monetary policy calls in turn for a common payment system in order to handle the payments connected with the policy’s implementation. The arrangements whereby all the national systems are interlinked is called the Target system. In the new system, a cross-border payment will normally be made in a matter of seconds, whereas at present in the best case it takes a whole day. The main objective of Target is to enable the ECB to implement monetary policy but the new system will also provide a new “highway” for commercial transactions.
I see Islamic finance having a major role in plugging this gap. Most, if not all of the seventeen SDGs are aligned with the objectives of Shariah (M aqasid Shariah), making Islamic finance naturally advance and spearhead sustainability goals. This is the case in Malaysia, where sustainability objectives are materialised through the adoption of Value-based Intermediation or VBI practices. For a few years now, Islamic financial institutions have contributed significantly in pursuing sustainability efforts domestically. We also see many Islamic financial institutions helming sustainability efforts in their respective financial groups, both domestic and foreign. Collectively, the Islamic financial institutions in Malaysia have intermediated over RM155.6 billion2 in VBI-aligned initiatives over the past 3 years. Being a mature system today, Islamic finance is poised to scale up value-based finance solutions and continue to take the lead to create greater impact on the environment, economy and society. Allow me to share how we can make this a reality. First, is by harnessing the power of digitalisation. Technology may not be the silver bullet. But, it holds massive potential to revolutionise and transform the way value is delivered in finance. Studies show that an estimated 70% of new value to be created in the economy over the next decade will be based on digitally enabled platforms3, priming conditions for breakthrough innovation to perennial problems. I believe, with the right and responsible application, emerging technologies can amplify the impact of Islamic finance in meeting sustainability goals.