However, in recent years, we have learned more about the concurrent need for macroeconomic stability and a stable financial system. That concept includes the need for businesses and consumers to have access to credit on fair and reasonable terms through all stages of the business cycle so that they can build and grow. We need an efficient and resilient payments system to maintain the flow of funds through the economy at all times. We need financial markets that remain active, liquid, and trusted regardless of events in the economy. The challenge for supervisors is to promote the health of the banking sector with a broad range of tools. We have certainly found that problems in the banking sector tend to have a “ripple effect” across the wider economy. Therefore, it is in everyone’s interest that a country’s banks should be able to manage their risks today and respond to challenges tomorrow. This is first and foremost the responsibility of the banks themselves, but supervisors also have an important role to play in ensuring that banks are prudently managed and capitalised. Banking is fundamentally about trust. Banks are charged with a special public trust to safeguard customers’ wealth. We have all seen what happens when customers lose trust in the ability of individual banks or the banking system as a whole to protect their savings. This puts a special onus on banking supervisors to ensure that banks operate soundly.
Leveraging on the experience of Bursa Malaysia in the area of exchange traded products, this platform is able to eliminate uncertainty in the transactions and could mitigate risks such as legal risk, market risk and counter-party risk. As Bursa Suq Al-Sila’ is designed to be a multi-currency platform, it can enhance liquidity and risk management capacity of the international Islamic banking community. Furthermore, it could be harnessed into a cost effective global platform to develop universally acceptable Islamic financial products for the financial and capital market. Overtime, in making it into a truly multi-commodity global exchange, the scope of the exchange-traded product offerings could be expanded to include other commodities and the level of participation should be expanded to include players from outside the financial services industry as well. The proposed collaboration between the Bahrain Financial Exchange and Bursa Malaysia is expected to strengthen cross border financial traffic between both our markets, as this platform has a vast potential to facilitate liquidity flows from one financial centre to another. It will also pave the way for optimisation of financial resources across borders as well as diversification of risks between our markets. Furthermore, this venture will also allow both our markets to explore various opportunities for further collaboration in the future, leveraging on each other’s strengths and achieve synergies for effective and efficient Islamic financial services industry. I urge the banks in Bahrain and Malaysia to work together and use Bursa Suq Al-Sila’ to enable the flows of funds that would enhance the liquidity management framework.