Demand decreases with the cost of borrowing, RB and supply increases with the return on bank debt (including deposits), RD, which for simplicity is taken to move in line with the policy rate R. In addition, there is a spread between RB and RD, reflecting expectations of default not only by end borrowers but also by the financial intermediary. In credit booms, this spread is often unsustainably compressed, while during credit crunches it widens sharply. Our macroprudential instrument, K, is assumed either to reduce the demand for credit, or to increase the spread between RB and RD, or both. Either way it reduces the total quantity of credit, C. Now unlike macroeconomic stability, which can be characterised as output being at its sustainable level once nominal wages and prices have adjusted and inflation is at target, there is no corresponding simple characterisation of financial stability. But for simplicity, let us assume that the authorities have in mind some maximum level of leverage that is consistent with the risks to future financial stability remaining acceptable. Then we have the downward-sloping frontier FS (for Financial Stability) in the right-hand panel that shows the minimum acceptable level of the policy rate for any given setting of the macroprudential tool. A reduction in perceived risk leading to excessive exuberance on the part of investors or borrowers would shift this frontier to the right. Putting these two policy relationships, PS and FS, together we get Chart 11.
Not least, Islamic banking continues to grow  1/4  BIS - Central bankers' speeches  further with more institutions adopting an Islamic-first strategy. With the growth of the assets comes the demand for corresponding Shariah-compliant investing and treasury services. These factors point to another area where we believe to be important in further advancing Malaysia as an international Islamic financial centre. The development of a vibrant Islamic financial market, in particular the ringgit Islamic financial market. Currently, Islamic money market volume already accounts for 38% of the total turnover in the money market while total trading volume has increased steadily over the years to RM5.9 trillion in Islamic money market as at end of 2021 (2020: RM4.91 trillion). Commodity Murabahah has been the predominant instrument in the Islamic money market with a 92.7% composition, followed by Qard Acceptance (5.6%), Negotiable Instrument of Deposits (1.2%) and others3. The overall bond market (including sukuk market) continued to grow with outstanding bond and sukuk growing at 8% in 2021 to RM1.7 trillion4. Turnover of debt securities and sukuk remained robust at RM1.87 trillion as of end-2021, with average daily secondary bond trading volume of RM3.8 billion. To date, Malaysia remains the biggest global sukuk market with a share of 52% of total outstanding sukuk and 42% share of global sukuk issuances as of end-20215. These are very good achievements - a strength that we can further build upon.