To counter this risk SWIFT, the telecommunications firm, is developing a product – known as the Market Infrastructure Resiliency Service (MIRS) – that will act as virtual third site for the Bank on an independent IT platform. Moreover, because SWIFT would operate MIRS from one of its European operating centres, it would not be affected by IT failure affecting both of our locations, increasing the degree of latency that MIRS will offer compared to a traditional model for a third site. MIRS will be available from January 2014, and we are the first central bank to take advantage of it. The Bank’s costs in relation to this project have been funded by the CHAPS member banks, who will benefit from the additional resilience MIRS will provide. 2  BIS central bankers’ speeches  Turning to the lesson that ‘liquidity matters’, we introduced a Liquidity Saving Mechanism (LSM) in April this year. There are some technical similarities to the Canadian “Jumbo algorithm”, which periodically looks to offset high-value (“Jumbo”) payments in bilateral queues, speeding up their settlement and reducing collateral requirements. The LSM in our RTGS system is an offsetting mechanism that seeks to match groups of payments, regardless of size, via bilateral and multilateral algorithms that run in short cycles around 275 times each day. All the payments matched by the algorithms will settle individually and simultaneously at the conclusion of the matching cycle.
This global resolve is in congruence with the role and relevance of Islamic finance on the global economic environment in this post-crisis era. While the amount of funds managed in the Islamic financial system is still only a fraction of the total assets of the international financial system, it represents that portion of financial activities that is truly supported by underlying productive capacity that connects with the real economy. Despite the unprecedented disruptions in the international financial system, studies show that the Islamic financial industry has weathered the global financial crisis relatively well. The financial crisis has thus brought about a greater appreciation amongst the international financial community on the distinct nature and in-built strengths of Islamic finance. Based on the Shariah requirement that Islamic financial transactions needs to be supported by an underlying economic activity, its expansion contributes to income and wealth creation. In addition, the profit sharing and risk sharing characteristics in Islamic finance strengthen the incentives for the financial institutions to ensure the profits are commensurate with the risks being assumed. It is this form of finance that we would want to encourage. With this underlying foundations, efforts are being directed to build the domestic financial infrastructure. A challenge that is being specifically addressed is the development of an active secondary global sukuk market. In this regard, there has been a lack of trading in the secondary market especially in the USD sukuk market as the investors tend to buy-and-hold the instruments until maturity.