8  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  There is ample empirical evidence of this channel in the data. Chart 5, for example, is a cross-country plot of relative price levels (the real exchange rate) against per-capita income. The latter is determined by whole-economy productivity. But much of the variation in aggregate productivity, across countries as well as over time, is in the tradable sector specifically. So the correlation is reasonably persuasive evidence of the 10  link between tradables productivity and exchange rates . And it’s quite possible that this is what lies behind sterling’s reaction to the referendum. Foreign exchange markets may believe that exiting the EU will in some way raise the cost of exporting – either directly, via the erection of barriers of one sort or another, or by depressing inward investment and productivity in the tradable sector (relative to that in other countries). What does the weaker currency do in the meantime? Some more exchange-rate economics I should emphasise at this point that what I’m musing about here are the implicit beliefs of the foreign exchange market. The specific question is why that market thinks the long-term consequences of leaving the EU warrant a lower sterling exchange rate. For its part the MPC has no particular expectation about the forthcoming negotiations. The currency market could turn out to have been too pessimistic. Two things are clear, however.

Our support continues through the work of the Taskforce on Islamic Finance and Global Financial Stability, jointly formed by the IFSB and the Islamic Development Bank (IDB), whose recently completed work has led to the establishment of the Islamic Financial Stability Forum (IFSF), which is yet another important international platform for the regulators around the world to deliberate and collaborate on initiatives towards maintaining financial stability in the Islamic financial system. And last but not least, Malaysia has been at the forefront to support global growth and development of Islamic finance through capacity building endeavours, focusing on the two key areas of human capital development and catalysing greater harmonisation of Shariah interpretations. The availability of talents who are skilled in both the financial and Shariah fields have been essential in invigorating innovation and dynamism of Islamic finance in  2  BIS Review 102/2010  Malaysia. This is reflective of our long-held conviction that sustainable growth of Islamic finance could not be achieved without adequate attention to the development of intellectual resources. It is out of this conviction that Malaysia has committed resources to support the broadening horizon of growth in country and beyond, through the deepening of knowledge and competence among financial practitioners and Shariah scholars within the industry. For this purpose, Malaysia has established the International Centre of Education in Islamic finance (INCEIF) to support advanced education in Islamic finance, while, the International Shariah Research Academy (ISRA) was founded to promote research and rigorous intellectual dialogue among Shariah scholars and practitioners on Islamic finance.