With a daily transaction amounting up to USD4 trillion, it is the most liquid and dynamic market in the world. It is a market that is prone to excessive movements and overshooting. Any effort to engineer a significant exchange rate adjustment within a short period of time carries the risk of highly destabilising consequences. Global imbalances that have been built up over several years need to be unwound by a combination of adjustments  BIS Review 131/2010  3  in demand, prices and exchange rates. Over reliance on the exchange rate to do the adjustment may not only not produce the desired result, but it also risks becoming a trigger factor to causing instability and future crisis. The final development that I wish to say something on is the global development of Islamic finance and its increasing role in enhancing global economic and financial linkages particularly among emerging economies. Islamic finance is all about basic banking that is always supported by underlying economic activity. Its profit sharing feature provides for risk sharing and thus the necessary due diligence, disclosure and transparency, risk management and governance. The industry is also well supported by the regulatory and supervisory standards issued by the Islamic Financial Services Board (IFSB). While the focus has been on keeping the regulation abreast with the developments in the financial system, emphasis is also given on the supervisory oversight, capacity building, and institutional and financial infrastructure development as part of the efforts to ensure financial stability.
Having an understanding of the range of possibilities, having the ability to make sound strategic decisions and excelling under the different circumstances also becomes important. The ICLIF leadership centre was established in 2003 as part of Bank Negara Malaysia’s commitment towards providing a focused and coordinated approach to enhance leadership capability and to develop world-class leaders. It was initially for the financial services industry, post the Asian Financial Crisis, with the aim of producing a new generation of leaders to steer the industry in a fundamentally transformed financial landscape. It has since been extended to corporate and public sector participation. The Centre, the first of its kind in Asia, focuses on the emerging market experience, contextualized mainly to Asia. ICLIF has now grown to offer a wide range of services in the areas that include leadership development, organizational performance, corporate governance and advisory services that are designed to enable sustainable and responsible business growth. In 2010, the ICLIF has further repositioned itself through the setting up of a new governance centre with a vision to promote high impact boards and develop world class directors who are advocates of best practices and excellence in corporate governance. Known as the Financial Institutions Directors’ Education Program or FIDE, it is currently the only governance initiative in the region that focuses exclusively on the financial sector and has trained hundreds of directors since its inception. The Centre has now been renamed as the ICLIF Leadership and Governance Centre with an enhanced faculty comprising renowned experts from the world leading institutions.