Washington, D.C. – October 10, 2010 – The Governor of the Central Bank of Malaysia, Dr. Zeti Akhtar Aziz, today, addressed the Islamic Development Bank (IDB) Group luncheon held on the margins of the World Bank/IMF Annual Meetings in Washington, D.C, setting a formal agenda for balanced growth and development from the perspective of Islamic finance.
Speaking to an audience of finance ministers, central bank governor and other key influential decision makers, Dr. Zeti highlighted the development and strength of Islamic finance as a competitive and resilient form of financial intermediation.
“Today, Islamic finance offers the range of financial products and services from a highly diversified financial system that include the provision of innovative and high quality financial products and services such as consumer financing, wealth management and wide ranging products from the Takaful industry and Islamic capital markets. It also has the capacity to promote project financing and long-term structured products for the financing of large-scale projects and infrastructure development. The sustainability of Islamic finance is due to its ability to remain as a competitive form of financing. Given that the Islamic financial instruments reflect the underlying economic activities and that such instruments inherently have the potential to provide tangible returns to investors, it has therefore created significant demand for Shariah compliant financial products. Shariah principles in this respect prohibit excessive leverage and speculative financial activities and discourages excessive risk exposure,” said Dr. Zeti.
An important dimension through which Islamic finance contributes to balanced growth and development lies in its emergence as an increasingly important channel for fostering international financial linkages, as observed through the increasing international dimension of Islamic finance in this recent decade.
Dr. Zeti added that, “The internationalization of Islamic finance is shaping new global patterns of financial and trade flows. It is also facilitated by progressive liberalization of emerging economies in the recent decade. There is now increased presence of Islamic financial institutions beyond their domestic borders and increased foreign participation in Islamic domestic financial markets. The wave of internationalization in Islamic finance which continued unabated despite the recent global crisis has contributed to stronger investment and financial flows between Asia and the Middle East, generating mutually reinforcing growth prospects for both regions. This has in particular contributed to the deepening of financial and economic ties between Asia and the Middle East, which harnesses the complementarities in these dynamic growth regions to promote trade, direct investment and finance.”

The President of the Islamic Development Bank, Dr. Ahmad Mohamed Ali, in his remarks, announced the IDB’s new US$1 billion sukuk issuance, which is AAA rated by S&P, Fitch, and Moody’s. The announcement precedes the Management forthcoming resource mobilization trip to meet potential investors in Riyadh, Kuala Lumpur, Singapore, Dubai, and London. The lead managers for the sukuk issuance will be CIMB Group, Citigroup Inc, HSBC Holdings, and Standard Chartered.
Dr. Ali also highlighted the continued expansion, vibrancy and increased acceptance of sukuk as a competitive means for raising capital and as an attractive asset class that meet the need of diversified investor base from all parts of the world.
In the engagement with the media, Dr. Ali highlighted key steps that are being undertaken by the Group to implement the IDB 2020 vision in order to fulfill the aspirations of its (56) member countries.
About the Governor of the Central Bank of Malaysia :
Dr. Zeti is the Governor of Bank Negara Malaysia since 2000. As Governor, she plays a key role in the monetary policy formulation and operations. She oversaw the successful transformation of the Malaysian financial system through the implementation of a 10-year financial sector master plan. She is also actively involved in promoting regional financial co-operation and chaired the EMEAP taskforce to draw up the blueprint for future financial cooperation in the region. Dr. Zeti is also active in the development of Islamic finance, domestically and internationally. She chaired various high-level taskforces including for the establishment of IFSB, cross-border liquidity management mechanism and on the role and relevance of Islamic finance in promoting global financial stability. She was also a member of the UN Commission of Experts to examine possible reform of the global financial system.
About the Islamic Development Bank Group:
The Islamic development Bank is an international financial institution established in July 1975 to foster economic development and social progress of its (56) member countries and so far for (77) communities in non-member countries. The Group comprises five entities, the Islamic development Bank, Islamic Research and Training Institute (IRTI), Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), Islamic Corporation for the Development of the Private Sector (ICD), and the International Islamic Trade Finance Corporation (ITFC).