The extent to which these conflicting imperatives can be reconciled in a sustainable manner remains unclear. A focal point of the reforms has been to protect retail banking from the vagaries of investment banking that often has involved higher risk-taking activities. In the United States,  1  As at December 2009. BIS Quarterly Review Statistical Annex, June 2010, Table 19. 2  The Banker publication. 2  BIS central bankers’ speeches  the Volcker Rule prohibits banks from carrying out certain types of investment banking activities if they wished to continue to rely on deposit funding. In a similar vein, in the United Kingdom, the adoption of the recommendations by the Independent Commission on Banking mandates banking groups to establish a separate subsidiary for their retail activities, and it prohibits the subsidiary from undertaking other businesses and risks. Solutions to these challenges are far from straightforward. While these and other reforms by the Basel Committee and the Financial Stability Board are expected to have far reaching implications for the landscape of the financial system as we know it today, they have yet to provide answers to many of the key questions that policymakers and the financial industry need to address in the pursuit of effective functioning and sound financial systems as we progress forward into the future. Since the global financial crisis, significant attention has been directed at evolving an effective macro-prudential policy framework, which can serve to rein in excesses and strengthen the nexus between finance and the real economy.
Zeti Akhtar Aziz: Finance and the real economy – fostering sustainability Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Islamic Development Bank (IDB) Regional Lecture Series on Islamic economics, finance and banking: “Finance and the real economy – fostering sustainability”, Jakarta, 19 December 2012. *  *  *  I am most honoured to be invited to deliver this inaugural lecture of the Islamic Development Bank Regional Lecture Series. I am also most delighted to be back here in Jakarta. I would like to thank the Islamic Development Bank for the invitation, and Bank Indonesia for kindly hosting this event. For more than three decades now, the Islamic Development Bank has had an important role in promoting economic growth and development in so many parts of the world, and associated with this, has been its role in fostering the development of Islamic finance. It has supported the building of key international financial infrastructure that has been important for the orderly global development of Islamic finance and for safeguarding financial stability. The Islamic Development Bank has also supported research and education efforts in this area, while its strategic interests in financial institutions in different jurisdictions have been an important catalyst for their establishment and expansion.