There has been a growing number of MIFC players with diverse business activities that range from international Islamic banking business in foreign currency to Islamic fund and wealth management, takaful and sukuk origination. The global sukuk market has expanded by an annual growth rate of 40%. Despite a slowdown in the sukuk issuance in 2008, there was still an estimated USD20 billion issuance taking place, with Malaysia remaining as the main issuer in the global market. The prospect of Islamic finance continues to remain positive despite the more challenging international environment. The global financial crisis has resulted in heightened calls for more transparent forms of banking that are subject to stricter governance and risk management practices. There are also greater demands for increased regulation. Following the financial reform that may take place, the world may see a banking system that is significantly different from before to the crisis. Many of the features currently being discussed are in fact explicitly embedded in the Shariah requirements. The in-built check and balances in Islamic banking avoids the excesses and over leveraging, a feature precipitating the current financial crisis. Ensuring that the Shariah requirements are embraced in its entirety is vital to ensuring the robustness and resilience of Islamic finance. Islamic finance must also draw upon the lessons derived from the current crises. It is vital that the regulatory regime based on the prudential standards issued by the Islamic Financial Services Board be implemented. This will further ensure the stability and soundness of the system.

This difference is primarily due to the even more expansionary monetary policy compared with last December. With the global economy improving and Swiss business activity picking up, an enduringly expansionary monetary policy will in time lead to higher inflation rates. We consider the current level of the three-month Libor rate as appropriate for the time being to enable the economy to return to sustainable, inflation-free growth. Monetary policy decision-making is difficult under present circumstances. Given the strength of the Swiss franc we have very considerably relaxed monetary policy and cut interest rates much more than the European central bank. We are aware that our expansionary policy entails certain risks. Yet we believe that in view of the sluggish development of the Swiss economy and the strength of the Swiss franc we are conducting a reasonable policy. To adopt a more restrictive monetary policy would be premature at the present time and might jeopardise the still fragile economic recovery, notably in the export sector. We are also of the opinion that we still have sufficient leeway to counter any increased price pressures in good time and that price stability is currently not threatened. The National Bank must be ready and willing to react to changes in the world economy. At the moment, we see mainly two risks which might compel us to reassess the situation and to adjust our monetary policy course. For one thing, the economic recovery in Europe might be delayed somewhat. For another, the Swiss franc could again come under upward pressure.