The forces of innovation also raise a number of issues concerning the divergence of Shariah views underlying a number of the Islamic financial transactions. While such a divergence of opinions in Islamic financial transactions is not a new phenomenon, it has now prompted increased international dialogue among the Shariah scholars from the different parts of the world. It is the closer linkages between the global Islamic financial markets and the increased platforms for greater engagement on Shariah issues that will contribute towards promoting an increased common understanding and mutual acceptance on the rules, standards and Shariah views, and for convergence to occur. This would evolve global Shariah standards for the Islamic financial industry. As Islamic finance continues internationalise with expanding scale, there will be greater financial intermediation linkages among the East Asian, West Asian, and the Middle East regions – creating the "New Silk Road". While this New Silk Road of financial flows is enhancing connectivity between Asia and the Middle East, both regions have, as in the case of the old Silk Road, extended the New Silk Road to the rest of the world. Global investors  4  BIS Review 121/2008  and the international financial community have already drawn benefits from the increased diversification of investment activity to the two regions. The expansion of the interlinkages of intermediation to and among these regions would in turn contribute towards a more efficient allocation of capital in the global financial system.

Since then, subsequent capital market reforms —together with the creation of the private pension system and the incorporation of other institutional investors and capital market openness—, changed the size, composition, depth, strength, and forward-looking vision of the financial sector in Chile. All of these reforms led to a sound development of the Chilean financial system. Welldesigned public policies and public-private collaboration allowed our country to build a more complete and dynamic financial system, capable of channeling savings and investment to the financing of companies and projects. Our country has been able to attract foreign investors like the ones present in the audience today, who trust in the professional quality of financial institutions and intermediaries and also in the robustness and technical quality of regulatory and financial supervision. Chile is a small and open economy with a strong macroeconomic framework, flexible exchange rate regime, prudent fiscal policy, adequate regulatory framework and robust financial supervision and a monetary policy that carries the weight of stabilizing the cycle through a two-year inflation targeting framework. All of these have contributed to have solvent financial institutions and build up buffers to face difficult times. In this context, the exchange rate and capital market play a relevant role in absorbing external shocks. 2  Stable inflation and a credible framework have contributed to low levels of dollarization. Meanwhile, the growing participation of non-residents and the institutional agents themselves have allowed the derivatives market to develop. Those policies have been applied in a coherent and consistent manner for many years.