Thursday, March 4, 2010

PETALING JAYA: Several trends will gain more significance in the aftermath of the global economic and financial crisis.

These include a more prominent role for Asia in the global economy, extensive international regulatory reforms and the growth as well as integration of Islamic finance into the international financial system.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said in a lecture at the inaugural Official Monetary and Financial Institutions Forum in Frankfurt, Germany, on Monday that these trends would gain more influence in the global economy and the international financial system in the post-crisis era.

She said policy flexibility in implementing monetary and fiscal stimulus; a sound financial system, households and corporate sectors that were not over-leveraged and increased intra-regional trade had supported the recovery in Asia.

“Trade among the emerging economies has already increased with this trend being most evident among emerging economies in Asia,” Zeti said, adding that intra-regional trade accounted for 50% of exports in 2008 versus 32% in 1995.

She said supported by stronger economic fundamentals, emerging economies were expected to grow at higher rates over the next five years compared with the period prior to the crisis from 2000 till 2008.

Zeti said there was agreement that the regulatory framework needed to be more responsive to risk.

She added that while there was agreement on the need to materially improve risk management in financial institutions, there had also been substantial debate in other areas such as the degree to which regulation should play a role in the system.

Zeti said Islamic finance “is well positioned to be a vehicle on the new Silk Road as the enabling supporting infrastructure is already in place.”

She said the increasing internationalisation of Islamic finance was accompanied by new emerging global patterns of financial and economic interlinkages.

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