4  BIS Review 31/2007  Extending the New Silk Road to the world Ladies and Gentlemen, While the New Silk Road is enhancing linkages between Asia and the Middle East, both regions have always extended the Silk Road to the rest of the world to participate in the these exciting developments on this route. Indeed, global investors and the international financial community are already drawing the benefits from the increased diversification of asset classes while riding on the dynamism of the two regions. As Islamic finance expands further, reinforced by the activities on the New Silk Road, there will be greater convergence towards ethical or socially responsible-type of investments (SRI) in the global financial community. Islamic investment guidelines share significant similarities with the SRI principles. The focus of Islamic investment not only involves the avoidance of riba-free activities but also extends to include issues related to ethical values, such as fair trade and environmental protection. Furthermore, the prospects of increased stability for financing flows and the focus on the role of real sector economic activities have ignited interest in utilising Islamic finance for sustainable development. This overwhelming gathering of so many issuers and investors here today provides some indication of the growing interest in Islamic finance, reinforcing the potential increased activity on the New Silk Road. We all have a part in the making of the New Silk Road into a vibrant source of wealth and prosperity in the global economy.
With Asian official foreign currency reserves exceeding USD2 trillion, and Middle East oil revenues exceeding USD1 trillion since 2000, the management of surplus savings and reserves in both regions will offer significant investment opportunities. Besides the institutional pool of wealth, the rapidly expanding middle class in both regions is a further trend sustaining the high savings rate and the increased demand for more sophisticated including consumer finance and wealth management. In Asia alone, we now have more than 2.4 million high net worth individuals 5 , not far behind the US with 2.9 million and Europe with 2.8 million, and these Asian individuals control an estimated amount of USD7.2 trillion financial assets. The size of this group in Asia is estimated to be increasing at 7% per year, second only to those in the Middle East, numbering 300,000 and growing at 9% per year. Traditionally, investors in Asia and the Middle East have looked to the developed Western markets to meet their investment needs, in view of the more developed financial markets and the range of asset classes. Increasingly however, there is growing interest and search for improved returns on investment in other parts of the world. This has been a global phenomenon for some years now, characterised by excess liquidity and low yields in the traditional markets. The New Silk Road creates linkages that build on the comparative advantages between Asia and the Middle East Ladies and Gentlemen, Historically, trade and investment in Asia and the Middle East has been linked to the developed economies.