Zeti Akhtar Aziz: Thoughts and visions on Islamic finance Welcoming remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Malaysia Showcase Dinner, Manama, 3 May 2010. *  *  *  I have the distinct honour today to welcome distinguished guests to the Malaysia Showcase Dinner, organized in conjunction with the 7th Islamic Financial Services Board Summit. Let me first of all express our appreciation to H.E. Tun Dr. Mahathir Mohamad for accepting our invitation to speak at this event, sharing his thoughts and vision on Islamic finance moving forward. Tun Mahathir needs no introduction. During his twenty two years of leadership, Malaysia experienced modernization and economic prosperity. Malaysia is today a forward looking nation that continues to sustain its economic performance. During the recent unprecedented international financial and economic crisis in 2008 and 2009, the Asian region has demonstrated remarkable resilience. The Asian economies have strong fundamentals with low public debt levels, providing flexibility to the governments in the region to implement large fiscal stimulus. In addition, strong and well capitalized financial institutions prevented disruption to credit flows to the private sector. In addition, the household and the corporate sectors in Asia are not over leveraged, thus are in a better position to sustain consumption and business activity. Asia is also not confronted by widespread unemployment. Malaysia is very much part of this strong and vibrant region. For Malaysia, the economic recovery is expected to continue to gain further strength in 2010.
The internationalisation of Islamic finance has observed the strengthening of ties between Asia and the Middle East in trade and investments in the recent years. The early trade ties allowed the Old Silk Road to flourish. Today, Islamic finance involving financial flows between the two regions has revived and revitalized these economic ties that generate mutually reinforcing growth prospects for both regions. The emergence of new financial centres in Asia and the Middle East and their increased integration has strengthened the foundations for a New Silk Road. It has also opened up and extended this potential to  BIS Review 60/2010  1  developed economies to forge stronger financial linkages with the growth regions of Asia and the Middle East. Our ties with Bahrain have long been cemented with the signing of a Memorandum of Understanding between the Central Bank of Bahrain and the Central Bank of Malaysia in 2001 to jointly develop Islamic finance. There is a presence of institutions from Bahrain with interest in institutions in Malaysia and from Malaysia in Bahrain, since 2001. In Malaysia, they have become part of more than 150 entities that participate in our Islamic financial system that offers the spectrum of Islamic products and services. While Islamic finance has demonstrated its resilience during the challenging period, continuous efforts are being taken to further strengthen its resilience and facilitate effective liquidity management across border.