How do they decide when and how strongly to tighten monetary policy? Like many central banks today, the Swiss National Bank follows an approach to decision-making based on risk management. In theory, this is relatively simple. We focus not only on the most likely path of the economy, but also take into account a range of possible outcomes around that path. In doing so, we weigh the potential costs and benefits of different policy measures. Of course, real life is more complicated. Our understanding of the economy is inherently imperfect. Economic models have a limited ability to capture the truth and predict the future. So how do we deal with this complexity and uncertainty in practice? Can we deduce some general principles for decision-making? My introductory remarks will address three such principles, namely pragmatism, consistency and determination. Where relevant, I will touch on our experience in Switzerland. I will begin with pragmatism. Pragmatism  1/4  BIS - Central bankers' speeches  In light of our limited knowledge about the economy and the influence of monetary policy, decision-makers are well advised to be pragmatic. They should choose policies that exhibit a certain degree of robustness to different circumstances. Rather than seeking measures that are optimal in the context of specific situations, decision-makers are better off adopting less ambitious policies that produce reasonably good results in a sufficiently large variety of scenarios. In analysing such scenarios, we work with models that incorporate a relatively small set of key relationships.

Another factor promoting enhanced cross-border flows relates to the issue of recognising Shariah interpretations in the offerings of cross-border products. The current efforts have already resulted in greater harmonisation amongst jurisdictions on the specific Shariah practices relating to Islamic finance. In our pursuit to promote understanding, greater engagements and intellectual discourse among the Shariah scholars in the region have been fostered through regional Shariah Dialogues. These dialogues have been highly constructive. In this Conference, the deliberations on Shariah during the Specialised Workshops and the engagements between Shariah advisors, would continue this process to enhance greater appreciation and understanding of our respective Shariah practices. 2  BIS central bankers’ speeches  The development of human capital in Islamic finance is another key thrust in our efforts to develop capacity in supporting cross-border Islamic finance business. The collaboration between Malaysia and Indonesia in promoting partnerships in Islamic finance education are already taking place to expand the pool of talent and technical expertise in Islamic finance. Strategic partnerships between the International Centre for Education in Islamic Finance (INCEIF) and 7 Indonesian universities have allowed for the exchange of academic resources for the offering of specialised programmes in Islamic finance. These crossfertilisation efforts are encouraging future collaboration between specialised training institutions from both countries which would certainly enrich the Islamic finance industry. Conclusion Izinkan saya untuk mengakhiri ucapan saya. Kewangan Islam kini telah berkembang pesat di serata dunia dan menjadi komponen yang semakin penting dalam sistem kewangan antarabangsa dan merupakan pengantaraan penting bagi transaksi rentas sempadan.