As illustrated in the accompanying charts, in the thirty years 1865-95 consumer prices are estimated to have fallen by 48% in the United States and 3 27% in the United Kingdom - average compound rates of decline of about 2% and 1% respectively. This is generally regarded as having been a supply-side-driven phenomenon arising from rapid productivity growth alongside abundant labour supply, aided by and the opening-up of new markets globally. Real GDP growth averaged 5-6% (boosted by immigration) in the USA and 1?% in the UK in that period. Subsequently, modest inflation took over, but inflation did not reach a serious scale until 4 the first world war. The inter-war years were rather different from the late nineteenth century episode. There was a mixture of deflation and inflation - but with the former being more the result of monetary policy mistakes, such as those associated with the Great Depression, than of supply-side forces such as were so plainly evident half a century earlier. Inflation did not really become re-established on a significant scale until the second world war, after which it persisted for most of the remainder of the twentieth century. Most recently, the potential problems posed by deflation, particularly in a financially developed world where debt and balance sheets interact, have become apparent, most notably perhaps in Japan. All in all, there is perhaps a mixed message from these historical examples. It may be possible to live comfortably with a modest pace of deflation, especially if it reflects benign supply-side influences.

Today, despite the effort to develop foreign currency (FC) issuances and other businesses out of Malaysia, we have not yet reached a critical mass. To date, FC issuances constitute only 4% of the total outstanding sukuk in Malaysia (March 2023: RM1.3 trillion), with USD being the main currency1. In terms of international players, these past few years have seen more consolidation rather than expansion or growth. Notwithstanding these, the FC or international business should represent a continuous opportunity for market players to develop further, in particular with the continued growth of our own international trade and investment and the foreign exchange liberalisations we have undertaken. Moving forward, while the opportunities of FC business remain available, the MIFC agenda will also give due consideration to strengthening the domestic ringgit market. Inclusion of MGII into international indices such as Markit iBoxx ALBI, Bloomberg Global Aggregate and JPMorgan GBI-EM have already led to improved visibility of Islamic instruments and increased foreign participation. Increased foreign participation in the local market via government issuances and multinational corporations' (MNCs) investment in the Halal industry is also envisaged to increase ringgit market appeal among the investors. Growth of takaful and re-takaful also continues to be a development focus. In the financial sector, Malaysia's takaful industry has continued to grow at a faster rate than conventional insurance. It recorded a compound annual growth rate (CAGR) of 20.6% in the first nine months of 2022 and outperformed conventional insurance's CAGR of 10.8%2.