17.01.2018  PaPanel: “New challenges for central banks”** Russia and the world: values and virtues /Gaidar Forum Luis M. Linde Governor  *  On 17 January 2018, Governor Luis M. Linde participated in the 2018 Gaidar Forum panel entitled “New challenges for central banks”. The panel was structured around a debate format moderated by Ksenia Yudaeva, First Deputy Governor of the Central Bank of the Russian Federation, with the participation of Jacob Aharon Frenkel, Chairman of JPMorgan Chase International and former Governor of the Bank of Israel, and Petr Aven, Chairman of the Board of Directors, ABH Holdings S.A. This note includes the thoughts on central banking that were the focus of Governor Linde’s speech. I. Taking a step back: three main developments have defined the global economy in the 21st Century.  Globalisation. The period between 1990 and the early 2000´s was characterised by an intense process of globalisation, with rapid growth of trade and financial relations among countries. For instance, between 2000 and 2007 the growth of world imports averaged 7.4% per year, about twice as much as global GDP growth. Global banking also expanded markedly, in terms both of cross-border activities and local entry into banking sectors overseas. The crisis entailed a dramatic and severe reversal of this trend. Trade plunged by more than 10% in 2009, an extraordinary collapse by historical standards. Since 2012, trade has gradually recovered at a slower pace than pre-crisis levels, with imports growing around 3% annually.
This inaugural conference is set to mark a significant step to enhance collaboration and deepen financial linkages in Islamic finance between Malaysia and Hong Kong. The theme “Sukuk as a Viable FundRaising and Investment Instrument” is most apt, given that the ethical-based fixed income instrument has increasingly gained recognition by the global financial community as an attractive source of funding for real sectors and long-term development. Adoption of best practices for sukuk issuance The growth of the global sukuk market has been very promising. It reached a stock value of USD268 billion at the end of 2013 and since 2000 has grown at a cumulative average rate of 50% per annum. The creation of a sukuk market in Hong Kong is a timely initiative as it has the potential to further spearhead its foray into Islamic finance. Sukuk, as a new asset class, is ideal for portfolio diversification and is increasingly well-accepted all over the world. From our experience, the new venture by Hong Kong into the sukuk market may be able to deepen its bond market further and open the opportunity to tap the burgeoning investor pool seeking good quality Shariah compliant and ethical-based instruments. Being a player in an increasingly developed sukuk market, Hong Kong has the opportunity to adopt the best practices in sukuk issuances. Firstly, in the area of Shariah standards where it provides principle-based guidance on the execution of Islamic financial contracts. Such standards are designed to cover the needs of different jurisdictions.