A model to reanchor finance to the real economy While the global financial stability efforts have made progress in generating an enabling environment for a new equilibrium of financial stability, a key consideration as we move forward is the need to redefine the fundamental character of modern finance and how it would interface and interact with the economy and the broader society. New considerations that prioritise justice and fairness, sustainability and inclusion have also become essential underpinnings of such a financial ecosystem. The recalibration of finance should aim to serve the needs of the real economy and more importantly the broader society. This would generate positive externalities that would in the medium term lead to more sustainable financial systems, and in turn contribute positively to growth and development. A core underpinning of Islamic finance is the tenet that requires Islamic financial transactions to be supported by genuine productive economic activity. Islamic finance is also a financial regime that places emphasis on risk-sharing, thereby strengthening further the link of finance to the real economy. Thus, it provides a greater understanding on the fundamental relationship between the financial sector and the real economy. The concept of risk-sharing in finance is not new. While risk-transfer activities currently dominate the conventional financial systems, risk-sharing in the form of equity has long been a cornerstone of capital markets with vibrant stock exchanges. Techniques used by venture capital financiers also have similarities to risk-sharing contracts in Islamic finance.
Christian Noyer: Challenges and outlook for the global economy Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at a press conference, Saint-Denis, Reunion, 14 November 2011. *  *  *  Secretary General of the Prefecture, Elected representatives, Consul General of China, Representatives of civil and military authorities, Ladies and gentlemen, It is a great pleasure to be here today. And not only because it is 20 degrees warmer than Paris at the moment, or because I spent the weekend enraptured by the beauty of your island and the friendliness of its people. I am particularly pleased to be here today because it is extremely important for me to have the opportunity to talk directly to local economic players throughout the French territory, listen to their views and explain our actions. Above all, in these complex times, such exchanges are tremendously valuable. I would especially like to extend my regards and thanks to the Mayor of Saint-Denis for receiving us in this beautiful venue. I will start by rapidly recalling the crisis to date and the solutions that have been implemented. In the past months we have witnessed a succession of serious and complex events. It is therefore logical that feelings of confusion and uncertainty have developed in society. I will thus attempt to provide some useful insights into the situation that we are currently facing.