At least in hindsight there are usually fairly clear tell-tale signs of expanding fiscal deficits and/or lax monetary policies, classically accompanied by evidence of imbalance in the form of accelerating inflation or a rapidly deteriorating balance of payments. There were such signs, perhaps most notably in Thailand; but they were not for the most part particularly pronounced in Asia. In fact through the first half of the 1990s, and in some cases for much longer, the countries in question were remarkably successful. They attracted, by their very success, huge inflows of capital from the rest of the world in search of higher returns. The capital inflow made a major contribution to sustaining the economic expansion in Asia, but, with the benefit of hindsight, the increasing scale of the inflow, and particularly the form that it took, became an important part of the problem. It was not all effectively employed. There was overinvestment in some production sectors; much went into ambitious property development; and much went into financial rather than real assets. The hoped-for higher returns could not be maintained. Again with the benefit of hindsight, it is possible to identify a number of structural weaknesses in the mechanisms for financial resource allocation in the recipient countries. There was, for example, a general lack of reliable financial information, and a lack of transparency in relation to the financial position, of both public and private sectors.
There is a regulation of the Capital Markets Board of Turkey dated 1 April 2010 that permits the issuance of rent certificate, which are very similar to asset-backed securities. We believe that such interest-free securities, which could also be traded in secondary markets, is very beneficial for the participation banks in their liquidity management operations. Distinguished Participants, The vital issue of liquidity management has the potential to reshape the future trends in the monetary policy framework. The path to resolution involves not only revisiting economic policies, but also economic and institutional infrastructure that surrounds them. In this sense, the Islamic finance has a good way to go in order to maintain well-structured liquidity management system. I hope that this conference will lead to new ideas that help authorities in their efforts to design a solid Islamic liquidity management structure. Thank you for your attention. 2  BIS central bankers’ speeches