Today I would like us to look at globalisation from the perspective of a central bank, taking into consideration the objective of the central bank, its ability to contribute to the shape of the economy and the instruments that a central bank has at its disposal. To start with, let us consider what channels there are through which globalisation may impact the monetary policy and the central bank. 1  “Economic globalization is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through trade and financial flows. The term sometimes also refers to the movement of people (labor) and knowledge (technology) across international borders.” According to: “Globalization: Threat or Opportunity?” IMF Staff, April 12, 2000 (Corrected January 2002). 2  See e.g. Mussa M. “Factors Driving Global Economic Integration” presented in Jackson Hole, Wyoming at a symposium on “Global Opportunities and Challenges,” August 25, 2000. 3  Economic Policy Committee “Responding to the Challenges of Globalisation”, November 2005. 4  Roach S. “The New Macro of Globalization”, Morgan Stanley Global Economic Forum, 6 June 2005. BIS Review 32/2006  1  Firstly, globalisation — through shaping real economic processes abroad, its influence on the global business cycle and commodity prices on global markets — influences the external environment of the national economy, which is monitored by the central bank and in which the central bank operates.
The aim of the plan is to provide clarity of the vision and objectives that are to be achieved in the context of a more challenging environment that is driven by rapid change in a world that is becoming increasingly more integrated and more technology and knowledge-based. In the development of our Islamic financial system, a comprehensive approach has been adopted. Malaysia has given emphasis to the development of a comprehensive financial infrastructure that includes the Islamic financial markets, Islamic financial instruments, contract law and law enforcement procedures, Shariah governance framework, Islamic accounting practices and valuation standards, appropriate disclosure requirements as well as an efficient and secure payment and settlement system. Attention has also been directed to develop the prudential regulatory and supervisory framework that underpins the stability of the Islamic financial industry. Today, my remarks will focus on three key areas in which greater attention is needed in order to secure a promising future for the Islamic financial services industry. These areas include accelerating the pace of financial innovation, strengthening risk management capabilities and leveraging on information technology. Accelerating the pace of financial innovation As we advance forward in the development of Islamic finance, innovation will be key in securing the competitive advantage. It will be vital to the future of Islamic finance.