To address this, efforts are needed to develop a sufficient number of competent lawyers and judges that are equipped with sound knowledge and expertise in both Shariah and civil laws to deal with such matters. Seventh, development of vibrant Islamic financial markets In the more developed financial centers, the development of inter-related financial markets has contributed towards the stability in the financial system. This is an area of priority for the Islamic financial industry. In this regard, the development of a comprehensive Islamic financial system including the various components of the financial markets would meet the requirements of the various differentiated groups. The challenge in the Islamic banking industry is, therefore, to steer the development of an Islamic financial system towards one which is more dynamic and responsive. The development of an Islamic financial system should include the key components comprising the Islamic money market and the Islamic equity and debt capital market, given the strong linkages, inter-dependence and synergies among these components in the system. Of importance is the Islamic money market to act as a platform to provide a ready source of short-term funding and investment. Financial instruments and interbank investment will allow surplus banks to channel funds to the deficit banks, thereby maintaining the funding mechanism necessary to promote stability in the system. The Islamic money market will also facilitate the conduct of monetary policy.

Zeti Akhtar Aziz: Ensuring stability in the Islamic financial system Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 3rd Annual Islamic Finance Summit, London, 13 January 2004. * I. *  *  Introduction  “In its nascent history spanning three decades, Islamic banking and finance has undergone rapid growth and transformation. From an industry striving to fulfil the religious obligations of the Muslim community, it is now a multi-billion dollar industry driven by well-defined business considerations and profit optimisation, whilst steadfastly upholding the Islamic principles. Indeed, this progress has been achieved against a challenging global financial and economic environment. The further development of Islamic finance requires for it to be endowed with the right pre-requisites that will ensure the evolution of an intermediation system that is viable, resilient and sustainable. Of essence, is the timeliness to develop an Islamic financial industry that is comprehensive and sound, that promotes financial stability and growth through the robustness of its regulatory framework, the dynamism of its inter-connected markets, the strength of its financial infrastructure and the responsiveness and sophistication of its products and services.” It is my honour to be invited to speak before this distinguished audience at this 3rd Annual Islamic Finance Summit organized by Euromoney. In the development of the Islamic financial system, significant attention has been given to ensuring financial stability. Several initiatives have been taken to promote financial stability in the Islamic financial system and thereby strengthen its foundations.