What I would like to do in the next ten minutes or so is to give you an overview of the current landscape of Islamic finance in Hong Kong from the perspective of both a financial regulator and a market facilitator, and tell you about how we could help promote this initiative from the Hong Kong Monetary Authority (HKMA) point of view. Why does Hong Kong wish to develop Islamic finance? First, allow me to share with you some thoughts in how we see the relevance of Hong Kong to the development of Islamic finance in Asia. From its early phase of development in the 1980’s, Islamic finance has grown tremendously and undergone a rapid transformation in less than two decades. Today, it has gained widespread recognition, not just among investors of the Muslim faith, but also among other investors who see Islamic finance as a new investment alternative. Islamic finance is therefore no longer characterised by its uniqueness, but rather seen as an integral part of the international financial system. This brings remarkable opportunities for Hong Kong, as a frontrunner in international finance, which possesses key strengths in financial intermediation on an international scale to bring together investors and fund raisers from different parts of the world. With that we see great potential for Hong Kong to take on the intermediary role for Islamic financial products, just as it currently does for conventional products to a high degree of sophistication across all asset classes.
Third, we are working hard to forge closer international links through co-operation with Islamic finance centres and organisations. Establishing business links is particularly important in face of the challenges brought by the integration of Islamic finance with the international financial system. In this regard, I am pleased to mention that Hong Kong has formed a working group with the Dubai International Financial Centre Authority to promote the mutual development of Islamic finance and financial market infrastructure. Closing remarks In closing, I would like to point you to an analogy often made between the rise of Islamic finance and the renaissance of the Silk Road. Let’s remember the Silk Road, in ancient times, was China’s link to the outside world and a route for trade and exchange of art, music, culture and religion. Today, Hong Kong is right at the heart of the New Silk Road, standing astride East and the West, and providing a gateway to business and financial opportunities. We have already painted a picture of how the financial regulators and industry associations will strive to promote the development of Islamic finance in Hong Kong, and we hope very much that the enormous forces of the market will make the New Silk Road as prosperous and significant as the old one. Thank you very much. 4  BIS Review 59/2008