KUALA LUMPUR: There is a compelling need for finance to have a greater role in shaping responsible behaviour that underpins a stable and well-functioning economy and advances the goals of a progressive society and sustainable environment, says Bank Negara Malaysia Governor.
Tan Sri Dr Zeti Akhtar Aziz said finance, if not anchored to the aim of creating sustainable value in the real economy, would become inherently unstable and destabilising to the ultimate goals of greater shared prosperity.
"On the path to achieve stronger, more balanced and sustainable growth, the potentials of responsible finance have therefore become greater than ever.
"Most important is for finance to be aligned to its ultimate goal of serving humanity and uplifting social wellbeing.
"Thus, more than merely performing its role as a passive intermediary of funds, finance today has the distinct potential of catalysing and shaping social outcomes," she said in her keynote address at the two-day Responsible Finance Summit here on Wednesday.
The summit is hosted by BNM. The organiser is RFI Foundation and co-organiser is Middle East Global Advisers.
Zeti said responsible finance, at its core, strove to serve wider objectives that were consistent with but went beyond the predominant objective of enhancing shareholder value.
She said in delivering long-term sustainable value, allocative efficiency was achieved in a manner that promoted stability and prosperity in the broader economy and sustainability of the environment.
"Above all, responsible finance aims to optimise its positive impact on society, economic wellbeing and development.
"This is the underlying objective of responsible finance.
"Of significance, aligning business practices towards responsible finance entails a paradigm shift away from the conventional thinking of finance as the most important distinction being the need to recognise and appreciate that responsible finance delivers value by focusing on its ultimate outcomes, rather than its immediate returns," she said.
Zeti said Islamic finance, a well-established component of responsible finance, has gained significant growth and prominence in the global financial system due to its inherent orientation towards promoting societal welfare.
She said this included the propagation of strong ethical values that engendered accountability and trust in its intermediation function, as well as the promotion of risk sharing that fostered entrepreneurship and equitable distribution of wealth.
"By virtue of its requirement for financial transactions to be supported by genuine productive activities, Islamic finance is also deeply rooted to the real economy," she said.
She said all these were hallmarks of Islamic finance which underpinned greater market discipline and stronger focus towards building sustainable and long-term value in capital allocation.
"Collectively, these characteristics enable Islamic finance to also serve as an effective model for responsible finance," she said.
Earlier, Zeti handed over Emas suku plaques to representatives of SapuraKencana Petroleum Bhd, Axiata Group and Cagamas Bhd for issuing foreign currency denominating sukuk and bond.
Emas is Malaysia's designation accorded to foreign currency-denominated sukuk and bonds originating from Malaysia in the global capital market.
The summit brings together key stakeholders from the traditional responsible and Islamic finance sectors to build connections to support rapid growth and increase the measurable impact of the industry. - Bernama