Malaysia is also the host to a number of the international institutions in the area of finance that include the Islamic Financial Services Board, and more recently, the Alliance for Financial Inclusion. We are very pleased that SWIFT, an important market infrastructure service provider to the global financial community, has selected Kuala Lumpur as its Corporate Services Centre. Malaysia’s financial sector has in this recent decade made significant strides in facilitating the country’s cross-border economic linkages with other economies. Malaysia is part of a vibrant region, comprising ASEAN and of the greater Asia. The region has prevailing strong foundations and significant growth prospects with strong inter regional connectivity. Malaysia’s volume of cross-border trade and foreign exchange settlements with ASEAN economies alone has grown at an average rate of 10% in the recent four years, reflecting Malaysia’s increasing integration with the regional markets. A vibrant foreign exchange market has supported this growth, where the overall Malaysian foreign exchange market volume has increased by more than five-fold in a period of 8 years to USD11.1 billion per day, at a ratio of about 6 times of total trade. Like most regional blocs, the integration process for ASEAN seeks to promote greater regional connectivity which will in turn expand and reinforce the region’s growth potential. The aim of reinforcing the regional linkages in the payment and settlement systems is to enable the establishment of risk mitigation mechanisms such as Payment versus Payment (PvP) and Delivery versus Payment (DvP) to reduce the foreign exchange and securities settlement risk.
Since the ASEAN region is largely within the same time zone, the ultimate aim is to achieve same day settlement and funds availability. In this regard, the ASEAN Working Committees have been working to create an enabling environment to promote efficient and effective linkages for intermediation of cross-border financial flows and capital market transactions. A crucial pre-requisite to this is the adoption of common messaging standards and platform such as that provided by the SWIFT global messaging standard to facilitate interoperability and efficient processing of transactions. Market infrastructure service providers, and operators of payment systems, and the banking industry, have a significant role in supporting this financial integration process, while ensuring safety, reliability and security. I understand SWIFT and the Association of Islamic Banking  BIS central bankers’ speeches  1  Institutions Malaysia and other stakeholders in the Malaysian Islamic financial community are also collaborating on the development of a new rulebook for the usage of SWIFT messages for Islamic financial transactions. This will provide an efficient platform for the exchange of messages for Islamic finance transactions based on such standardised formats and bring us a step further at the frontier of Islamic finance. Let me now turn to the developments in Malaysia’s payment system. The Malaysian payment system is undergoing a major transformation. Like other successful financial market infrastructure globally, concerted efforts are being made to enhance the reliability, security, efficiency and inter-connectedness of the Malaysian payment system for the benefit of all stakeholders in the payment value chain.