The strategy has been to institute the entire financial system chain to ensure its smooth functioning thereby contributing to a balanced allocation of financial and economic resources within the economy, and a greater diversification of risks within the system, and thus achieving overall stability of the Islamic financial system. The initiatives taken include building the required financial institutions, robust regulatory and supervisory framework, effective legal and Shariah framework, the financial markets, effective payment and settlement system, reinforced by the development of the skill talents, and putting in place the mechanism for the operation of the Central Bank. The development of this chain has promoted greater linkages and integration within the domestic Islamic financial system. Attention has therefore been given to the development of the key structural components of the system, comprising the Islamic banking industry, the takaful industry, the non-banking institutions and the Islamic interbank and capital markets. These respective components of the Islamic financial system have now become highly integrated and interdependent. This more diversified financial infrastructure has also enhanced the efficiency in the functioning of the overall financial system. The development of the Islamic financial system in Malaysia started with the establishment of Tabung Haji in 1969 as the first Islamic savings institution. This was followed by the establishment of full-fledged Islamic banking and non-banking institutions. A year after the establishment of the first Islamic Bank in 1983, a takaful or Islamic insurance company was established under the Takaful Act.

Regarding the financial sector more specifically, the new legislative framework provides much better support for reducing non-performing loans (NPLs) compared with the situation a couple of years ago. This will help banks support economic growth and job creation more effectively. But let’s not forget where it all started. Never again should a euro area country end up in such an unsustainable position as Greece’s in 2010. We need responsible national fiscal and economic policies, and a better euro area governance framework. As for enhanced surveillance, it is not a new programme but rather a strengthened form of cooperation between Greece, the European institutions and the euro area countries to support the transition towards full market access. Make no mistake, the burden of gaining the trust of markets and depositors has now fully shifted to the Greek government. Don’t expect building trust among investors to be easier than convincing the institutions. What will be the ECB’s role in the context of enhanced surveillance? Will you provide your contribution as in the past? We will remain involved in the enhanced surveillance, as mandated by the European regulations underlying this framework (the so-called two-pack). But the end of the programme is also an opportunity for us to refocus our activities, as already indicated in the opinion we published in April 2018. Looking ahead, our work in Greece will now be focused on financial and macro-critical issues. More specifically, this includes financial sector stability, macroeconomic projections, headline fiscal targets, and sustainability and financial needs.