Borderless economy oic

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THE BORDERLESS ECONOMY FROM ISLAMIC FINANCE PERSPECTIVE PRESENTED BY MUHAMMAD ZAHID ABDUL AZIZ, MALAYSIA 3RD OIC-ASIA TRADE & ECONOMIC FORUM 2014 KUALA LUMPUR NOVEMBER 2014 1
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  • 1. THE BORDERLESS ECONOMYFROM ISLAMIC FINANCE PERSPECTIVEPRESENTED BY MUHAMMAD ZAHID ABDUL AZIZ,MALAYSIA3RD OIC-ASIA TRADE & ECONOMIC FORUM 2014KUALA LUMPURNOVEMBER 20141

2. A BANK USED TO BE BRICK AND MORTARS OPERATINGWITHIN A SPECIFIED BORDER.WHILST THIS IS TRUE, MANY OF CURRENT BANKINGPRODUCTS CAN BE USED IN A BORDERLESS WORLD.FOR EXAMPLE AN ATM MACHINE CAN GIVE YOU CASHIN ANY PART OF THE WORLD.FOREIGN EXCHANGE CAN BE BOUGHT IN ANY BRANCHOF THE WORLDCREDIT CARDS CAN BE USED IN ANY PART OF THEWORLD2 3. HOWEVER THE BORDERLESS ASPECTS SEEMS TO BECONFINED PRINCIPALLY TO RETAIL PRODUCTSWHAT ABOUT CORPORATE PRODUCTS?CAN A COMPANY OBTAIN A LETTER OF GUARANTEE FROM ANOVERSEAS BANK WHO HAS A RELATIONSHIP WITH ITS LOCALBANK?CAN A COMPANY OBTAIN A WORKING CAPITAL, TERMFACILITY, LEASING/IJARAH OR ANY CORPORATE FACILITYFROM AN OVERSEAS BANK WHO HAS A RELATIONSHIP WITHITS LOCAL BANK?CAN A COMPANY OPERATE A CURRENT ACCOUNT IN ANOVERSEAS BANK BASED ON THE OVERSEAS BANKSRELATIONSHIP WITH ITS LOCAL BANK?3 4. IT SEEMS MUCH POSSIBLE AND MAY ALREADY EXIST ININTERNATIONAL INVESTMENT BANKING?CAN A COMPANY IN ENGLAND ENGAGED AN ARRANGINGBANK IN MALAYSIA TO RAISE AN INTERNATIONALSYNDICATION FOR ITS PROJECT IN SOUTH AFRICA WITHPARTICIPANTS MAINLY FROM MIDDLE EAST?CAN A COMPANY IN GERMANY RAISED A SUKUK BYENGAGING AN ARRANGING BANK IN DUBAI FOR ITS PROJECTIN LATIN AMERICA FUNDED MAINLY BY BANKS IN ASIA?CAN A MERCHANT BANK IN AMSTERDAM BRING TO LISTINGITS CLIENT IN KOREA AT THE NEW YORK STOCK EXCHANGE?CAN AN ASSET MANAGER IN EIRE RAISED A FUND IN THEMIDDLE EAST FOR PROJECTS IN ASIA?IF THERE ARE STILL REGULATORY HURDLES TO THESE, THENWE HAVE NOT YET REACHED A BORDERLESS WORLD FORFINANCE.4 5. IN MALAYSIA IT IS REPORTED THAT BECAUSE OF THE EASINESSSOF BORDERLESS INTERNET PAYMENTS BETWEEN COMPANIESINTERNATIONALLY, DEMANDS FOR LETTERS OF CREDIT FACILITIESFROM BANKS ARE DWINDLING.WILL THIS LEAD TO INTERNATIONAL TRADE CONDUCTED WITHOUTTHE NEED FOR BANKS AS INTERMEDIARIES?THE HANSEATIC LEAGUE OF GERMAN INTERNATIONAL TRADERSTHRIVED FOR 4 CENTURIES (13TH-17TH CENTURY) WITHOUT BANKSIN INTERNATIONAL TRADE. EQUITY INVESTING AND VERYDIVERSIFIED INVESTMENTS IN NUMEROUS SHIP CARGOES WASTHE SOLUTION.WITH THE CURRENT BORDERLESS WORLD OF INTERNETPAYMENTS AND INTERNET ENGAGEMENTS BETWEEN TRADEPARTNERS WILL WE SEE THE DEMISE OF BANKS ININTERNATIONAL TRADE?5 6. IN THE BORDERLESS WORLD OF INTERNET PAYMENTS DO WE STILLNEED AN INTERNATIONAL RESERVE CURRENCY TO SETTLEINTERNATIONAL TRADE?CAN NOT INTERNATIONAL TRADE BE SETTLED ALL BY LOCALCURRENCIES?CAN GOVERNMENT INSTEAD OF BANKS PLAY THE INTERMEDIARYROLE IN INTERNATIONAL TRADE TO PAY THEIR EXPORTERS WITHLOCAL CURRENCY?CAN GOVERNMENT INSTEAD OF BANKS PLAY THE INTERMEDIARYROLE TO ACCEPT PAYMENT FROM THEIR IMPORTERS IN LOCALCURRENCY AND EFFECT PAYMENT TO THE CORRESPONDINGFOREIGN CENTRAL BANK IN THEIR LOCAL CURRENCY?6 7. CAN OIC NATIONS STOCK OF GOLD BE KEPT CENTRALLY INONE AGREED MUSLIM CAPITAL CITY, AND INTERNATIONALTRADE BETWEEN OIC NATIONS SETTLED VIA BOOK ENTRIESOF NET INTERNATIONAL TRADE SET OFFS?WHY DO WE NEED AN INTERNATIONAL RESERVE CURRENCYWHEN WE CAN BYPASS THAT THROUGH BROTHERLY MUSLIMTRUST?CAN WE EXTEND THIS ARRANGEMENT TO FRIENDLY NON OICAND NON MUSLIM COUNTRIES?IN THE MATURING OF THE INTERNATIONAL BORDERLESSECONOMY IS INTERNATIONAL TRADE WITHOUT BANKS ANDWITHOUT AN INTERNATIONAL RESERVE CURRENCY APROBLEM?OR IS IT ACTUALLY THE BOON THE WORLD INTERNATIONALTRADE AND THE WORLD ECONOMY IS WAITING FOR?7