The internationalisation of Islamic finance has observed the strengthening of ties between Asia and the Middle East in trade and investments in the recent years. The early trade ties allowed the Old Silk Road to flourish. Today, Islamic finance involving financial flows between the two regions has revived and revitalized these economic ties that generate mutually reinforcing growth prospects for both regions. The emergence of new financial centres in Asia and the Middle East and their increased integration has strengthened the foundations for a New Silk Road. It has also opened up and extended this potential to  BIS Review 60/2010  1  developed economies to forge stronger financial linkages with the growth regions of Asia and the Middle East. Our ties with Bahrain have long been cemented with the signing of a Memorandum of Understanding between the Central Bank of Bahrain and the Central Bank of Malaysia in 2001 to jointly develop Islamic finance. There is a presence of institutions from Bahrain with interest in institutions in Malaysia and from Malaysia in Bahrain, since 2001. In Malaysia, they have become part of more than 150 entities that participate in our Islamic financial system that offers the spectrum of Islamic products and services. While Islamic finance has demonstrated its resilience during the challenging period, continuous efforts are being taken to further strengthen its resilience and facilitate effective liquidity management across border.
The Islamic Development Bank (IDB) in collaboration with the Islamic Financial Services Board (IFSB) has formed two taskforces – the Taskforce on Islamic Finance and Global Financial Stability and the High Level Taskforce on Liquidity Management. An important recommendation of the Task Force on Financial Stability that has been now operationalised in 2010 is the establishment of an Islamic Financial Stability Forum (IFSF) to be held twice a year following IFSB Council Meetings. It forms a strategic platform for productive dialogue to promote financial stability in the Islamic financial system. It also has the potential to interface with the Financial Stability Board in the conventional system to serve the common aim of achieving global financial stability. Let me conclude my remarks. An important dimension of Islamic finance is not only its potential role and relevance in contributing to global financial stability but also its potential to support overall global economic growth. More importantly, it also represents an important channel for greater connectivity among emerging economies to not only enhance trade and investment flows but also international financial flows between nations and in so doing contribute towards an optimum allocation of resources across borders. These combined efforts will contribute to the stability of the international financial system and global economic prosperity. 2  BIS Review 60/2010