This is an essential 2nd task not only for the development of Islamic Financial services but also for their integration. Each country will have to look at the legal and supervisory structures for Islamic Finance. However, inconsistent standards, in areas such as legal documentation and settlement of unresolved issues, can inhibit the growth of the Islamic financial services sector across borders. Conversely, when consistent standards are applied across jurisdictions, the costeffectiveness of Islamic financial service operating across borders improve. It also improves the attractiveness of the institution’s products to international investors, regardless of the  1  Islamic Financial Services Industry Development Ten Year Framework and Strategies. This was a joint initiative between Islamic Financial Services Board, Islamic Research & Training Institute, Islamic Development Bank and Islamic Research and Training Institute. 2  BIS Review 63/2008  country of origin. A significant challenge today is the need for greater convergence of rules and practices in Islamic Finance. In this regard, I commend the work of international standard setting bodies for Islamic Finance – AAOIFI, IIFM, IDB and IFSB. For example, IFSB’s recent publications on corporate governance, disclosure and capital adequacy standards are very useful. It is important that as regulators, we participate in appropriate standard-setting international organisations, and work towards the convergence of rules and practices across jurisdictions. Where convergence is not possible, we can work towards mutual recognition of those rules. The Ten Year Framework and Strategies also highlights the need to ensure tax neutrality between the Islamic services providers and their conventional counterparts.

First, the issuance will be on a reverse enquiry basis, which means we will issue according to the needs of financial institutions in Singapore conducting Islamic Finance. Second, at the initial stage, we plan to price these against the liquid Singapore Government securities market. This will provide a transparent price discovery mechanism for this new instrument in Singapore. As the $ sukuk market grows and deepens in time, it can then develop its own pricing benchmarks. The design of our sukuk issuance facility reflects our effort to harness the price discovery potential of existing liquid instruments, while adhering carefully to Shariah principles. Further details of this arrangement will be announced in due course and we look forward to your feedback. We will also make significant progress in integrating financial markets when we provide greater market access for Islamic service providers to operate across borders. I am glad that regulators in the Middle East and South-East Asia have been very supportive in this area. For instance, several major Islamic banks in the Middle East now have operations in Malaysia. More recently, several Middle Eastern banks have also established themselves in Singapore. The first home-grown Islamic bank in Singapore, the Islamic Bank of Asia was set up in Singapore in 2007. The IBA is a joint venture between Singapore’s DBS Bank and Middle Eastern investors from Bahrain and the GCC countries. I am pleased that within one year of its existence, the bank will be opening a representative office in Bahrain next week.