Malaysia, London Islamic finance alliance

MALAYSIA and London can pave the way towards bridging Islamic financial markets between the East and the West, according to Bank Negara Malaysia's governor Tan Sri Dr Zeti Akhtar Aziz.

She said the global financial crisis had highlighted several structural weaknesses and imbalances in the international financial system.

"Whilst Islamic finance is not insulated from the effects of the current environment, the Syariah principles and values that underlies Islamic finance provides an important underlying foundation," Zeti said at the two-day Euromoney 8th Annual Islamic Finance Summit on "Islamic Finance and Global Financial Stability" which began yesterday in London.

"As we weather the current environment and prepare for the next wave of the growth cycle, it is also timely to explore the potential synergy that can be optimised between London, an international financial centre, and Malaysia, an international Islamic financial hub," Zeti said.

"And in so doing, capitalise on the respective comparative advantage, thereby strengthening the linkages between Islamic financial markets, in particular, between the East and West," she said.

Zeti said with total global Islamic financial assets now estimated at US$700 billion in 2007, the Islamic financial industry was offering a wide range of complex and sophisticated Islamic financial products and services.

Of significance, she said, was its greater integration into the international financial system.

As it becomes part of the financial globalisation process, Islamic finance has, however, become increasingly exposed to the systemic implications of external developments, Zeti said.

She said the range of Islamic money market instruments could be a viable platform for the development of a bilateral currency market.