On the other hand, the global surplus of savings over investments causes the capital to chase the high yield opportunities, thus increasing asset prices in many countries. An exemplary case may be increases in stock exchange indices, bond prices or real property prices in Anglo-Saxon countries and e.g. in Spain. As a logical consequence, a question arises about how the monetary policy should be conducted in these circumstances, and in particular, whether it should respond to the increase in asset prices despite the fact that inflation of consumer goods and services remains low or very low. Another vital question arises about the appropriate level of central bank interest rates when long-term interest rates remain low, possibly as a result of globalisation. A hot debate accompanies the issue, both among the central 26 27 bankers and among academics. The Chairman of the Federal Reserve, Ben Bernanke, in his address 28 last month, presented possible diagnoses regarding the sources of low interest rates on the bond market despite as many as fourteen increases in the central bank references rates. There are at least two explanations of such situation. If the long-term interest rates remain unchanged and the short-term ones increase, this means that either the markets pessimistically assess the perspectives of economic growth or the risk premium related to forward rates decreases; here this may be the inflation risk premium or real interest rates volatility risk premium. Another explanation may be the very effect of global imbalances, i.e.
Zeti Akhtar Aziz: The development of Islamic finance Welcoming remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Royal Award for Islamic Finance gala dinner, Kuala Lumpur, 25 October 2010. *  *  *  It is my very great honour to welcome this distinguished audience to this special gala dinner organised by Bank Negara Malaysia and the Securities Commission to commemorate the presentation of the inaugural Royal Award for Islamic Finance. This gala dinner is also held in conjunction with the Global Islamic Finance Forum 2010 that is taking place this week, and which commenced this morning. Tonight, in commemorating this prestigious Royal Award for Islamic Finance, we are blessed and honoured to have Kebawah Duli Yang Maha Mulia Tuanku Haji Abdul Halim Mu’adzam Shah who will graciously confer the winner with the award. Bank Negara Malaysia and the Securities Commission are proud to jointly sponsor this award under the auspices of the Malaysia International Islamic Financial Centre initiative (MIFC). Allow me to take this opportunity, as Chairman of the MIFC Executive Council, to record our utmost gratitude to the Rulers’ Council of Malaysia for bestowing the Royal title to the award, giving it the highest distinction and recognition. Earlier this year, Malaysia launched a global search for the winner of this auspicious award which seeks to honour the exceptional individual who has made the most outstanding contribution to Islamic finance.