Governor of Malaysia’s central bank Zeti Akhtar Aziz said at a conference on financial stability that the recent financial crisis in advanced economies had demonstrated the consequences of liquidity constraints.
The turmoil had also underscored the importance of a strong and well-developed liquidity management infrastructure, added Zeti.
In order to facilitate effective cross-border liquidity management, Zeti said that the Islamic Financial Services Board (IFSB), in collaboration with the Islamic Development Bank (IDB), had established a liquidity management task force.
Hoping that the framework developed by the task force could be set in place in 2010, Zeti also called for the regulatory and supervisory framework to be strengthened.
The IFSB is an international standard-setting organization that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry.
The IDB is an international financial institution established in pursuance of the Declaration of Intent issued by the Conference of Finance Ministers of Muslim Countries in December 1973.
Touching on the development of Islamic banking in Malaysia, Zeti said the system had become a vibrant one in the country with banking assets accounting for 18.8 percent of the total banking assets.
Zeti noted that Malaysia had an efficient functioning Islamic money market traded in the domestic currency with greater monetary flexibility in the system, drawing wider participation from the international financial community.
Zeti also said that when Islamic finance continued to become an integral part of the global financial system, the current scope of cooperation framework could be broadened to deal with confronting new challenges.
sourece : pdo