Muhammad bin Ibrahim: Towards proportionality in practice – financial inclusion and implementation of global standards Opening remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Global Symposium on Proportionality in Practice, Kuala Lumpur, 28 May 2015. *  *  *  Ladies and gentlemen, thank you for the opportunity to speak today at the opening of the Global Symposium, with the theme “Towards Proportionality in Practice: Financial Inclusion & Implementation of Global Standards”. Financial inclusion has captured the attention of many decision makers around the globe. We can confidently say that we have been successful in educating the world on the importance of ensuring access and usage of quality financial services by all segments of society. I think it has dawn to the power that be that financial inclusion empowers low income households and SMEs to improve their livelihood and because financial inclusion provides equal opportunities (and hopefully, it appropriately designed, equal outcomes), it also enables the under served to save in a secure manner, invest in productive activities and protect against unforeseen shocks. Financial inclusion, based on empirical evidence also reduces inequality 1, which in turn supports inclusive and sustainable growth, by allowing the poor to stay healthy, stay out of poverty, pay for education and accumulate human capital 2. It is, a very worthwhile agenda to pursue.
Following a strong 2021, foreign equity and bond inflows into onshore markets softened this year on the back of geopolitical uncertainty, Covid lockdowns, and the China-US monetary policy divergence leading to a reversal of onshore bonds’ yield premium. 10. Notwithstanding this, the scale of the decline in foreign purchases and holdings has moderated recently and is relatively small compared to global investors’ total holdings in onshore equities and bonds. We believe that these short-term fluctuations will not reverse the long-term trend of foreign investment in Mainland capital markets. 11. In fact, several key drivers will continue to strengthen interest in diversification into RMB assets over the medium term. These include (i) continued inclusion of onshore equities and bonds into major global indices; (ii) China’s long-term economic growth prospects; (iii) RMB being a stable currency that is increasingly recognised as a reserve currency; and (iv) lower correlation of RMB assets with other global financial market assets. 12. These factors are paving the way for a structural shift which will motivate global investors to think more strategically about their exposure to China. This, in turn, will spur demand for RMB assets and facilitate the further opening up of the onshore capital markets. 13. In the remaining time, I would like to highlight in more detail a few upcoming developments which will be of interest to international investors seeking access to Mainland capital markets. 14.