KUALA LUMPUR: The new horizon that is emerging is the rapid internationalisation in Islamic finance that needs to be strongly underpinned by three key factors to ensure its sustainability, according to Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.

First, she said the wide range of global supply of high quality Islamic financial products and services that were able to meet the requirements of international businesses.

“In this phase of growing international transactions, Islamic finance needs to be dynamic and innovative, with an emphasis on the development of diversified and comprehensive syariah-compliant financial solutions to meet the differentiated needs of various businesses, including the requirements of international businesses and thus facilitate cross-border investments.”

Second is having diverse and dynamic intermediaries and market participants that have a global focus.

“This includes having Islamic banking, takaful and capital market players that venture beyond domestic boundaries to tap global opportunities,’’ she said in her opening address at the GIFF 2012.

Zeti said global ancillary services that were proficient in syariah also had an important role in providing supportive professional services for such intermediaries and market players to effectively embark on cross-border activities.

She added that having the required talent was another imperative in steering the Islamic financial sector towards increased internationalisation.

The new financial landscape would require world-class business talent and boards with knowledge of the risks associated with internationalisation, she said.

Third, Zeti said effective linkages and connections between global financial markets would be facilitated by business enablers, particularly in the area of legislation, taxation and regulation.

The new global landscape of growing cross-border financial flows between regions that had national and cultural differences also underscored the need for enhanced recognition and understanding of practices in the different jurisdictions, she added.

Meanwhile. Turkey Deputy Prime Minister Ali Babacan, when presenting his public lecture, stressed the importance of structural reforms, saying that fiscal or monetary expansion was not an alternative to structural reforms.

He said whatever expansion taken should be accompanied by a medium-term credible programme for normalisation.

“We cannot continue with the excessive balance sheet of central banks forever and with an excessive budget deficit.

“If there is a short-term implementation of the expansion, it should be accompanied with a medium-term consolidation programme and a clear exit strategy,” he added.

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