Women in Islamic finance: Zeti Akhtar Aziz

Islamic Investor, March 2011

It’s hard to think of any woman, or any person at all, who has had a greater impact on the development of the industry than Dr Zeti. Governor of the central bank since 2000, and a staffer since 1985, she has consistently piloted Malaysia towards a pivotal role in international Islamic finance, first by helping to nurture a strong domestic industry, and then by developing the infrastructure to make the country a global hub.

Throughout, the sense of common ground shared between her, the Securities Commission (also headed by a woman, Zarinah Anwar) and the government has been vital, but Zeti and Bank Negara have consistently been seen as the spearhead of Islamic finance development in Malaysia. The Malaysia International Islamic Finance Centre, which seeks to bring international Islamic capital into Malaysia, is chiefly a Bank Negara (and Zeti) initiative; the redevelopment of the domestic Islamic banking industry into fully fledged independent banks rather than subsidiaries or Islamic windows has come under her watch, building a sector strong enough to survive the global financial crisis largely unscathed; and the growth of the world’s largest sukuk market, with the only secondary market that trades in any meaningful way, must in part be attributed to her. She has been instrumental in a host of educational institutions that have sprung up in Kuala Lumpur, including efforts to increase the pool of Shariah scholars, a key bottleneck.

Today Islamic finance is 21% of the Malaysian banking sector – beating a national target set for the end of 2010 some years back – while more than half of bond issuance in Malaysia is Islamic. The sector has thrived in an environment that has emphasised enablement, stability and learning, and she has been a large part of all three attributes.

A private woman, surprisingly understated in speech, she will not be drawn on her own career or the role of women in Islamic finance, but instead prefers to talk about her industry, how it has arrived where it is and where it is going. “We drew a lot of lessons from the Asian financial crisis,” she says. “And following that we moved to strengthen our financial system to give it the resilience it has now. As a result we can focus on long-term issues like developing our sukuk market and building the financial infrastructure for our system, because we don’t have to spend our time fire-fighting on failed financial institutions.”

Today her favourite subject is the International Islamic Liquidity Management Corporation, an international initiative spawned by the financial crisis in order to improve liquidity in Islamic banking. Zeti was part of the team pulled together to develop the system, which draws on the lessons she learned domestically in Malaysia. “We already have a well-functioning Islamic money market to facilitate liquidity management, but it is only in the ringgit market,” she says. “In a crisis, liquidity gets evaporated,” she says, and IILM will therefore make a contribution to global financial stability.

Zeti’s watchwords are stability and governance, and she is a strong believer in the role Islamic finance can play not just for Muslims but for world financial markets. “I believe Islamic finance has been able to offer tremendous benefits, and will continue to grow at a very strong rate in the future.”